NEWS
Key hearing for Magna’s financing plan set for Friday
Posted: Thursday, March 12, 2009 12:28 PM
by Frank Angst
A Friday hearing could give minority shareholders in MI Developments a stronger say in bankrupt Magna Entertainment Corp.’s financing plan.
A revision to the original debtor-in-possession plan in which the racetrack owner will secure a $62.5-million financing facility from its parent company, MI Developments Inc., could give minority shareholders at MI Developments more power.
The revision documented in United States Bankruptcy Court of the District of Delaware records notes that the Ontario Securities Commission awards protection to minority shareholders regarding formal valuations and requires minority shareholder approval for related party transactions. The revision notes that this would include the DIP financing between Magna Entertainment and MI Developments.
Frank Stronach is the founder and chairman of both companies. While each company includes independent boards of directors, minority shareholders like David Einhorn’s Greenlight Capital and Farallon Capital have questioned MI Developments’ dealings with Magna.
In February, Farallon opposed further investments by MI Developments in Magna Entertainment. In 2005, Greenlight Capital proposed that MI Developments spin off Magna Entertainment.
Greenlight Capital filed a motion on Thursday noting its intent to oppose the DIP financing plan, which will help Magna continue its day-to-day operations. Greenlight Capital has filed as a creditor in the Magna Entertainment bankruptcy.
If the plan fails to come together, Magna could be forced to halt some of its racetrack operations. In the outline of the financing plan presented in court documents, Magna said it would suffer irreparable harm if the plan is not approved, including “a cessation of racing operations.”
A hearing on the debtor-in-possession financing plan is scheduled for Friday.
In other Magna Entertainment news in its Chapter 11 bankruptcy case:
* Judge Mary Walrath has scheduled an auction for April 3 in which some of Magna’s top properties will be offered.
Magna’s financial advisors, Miller Buckfire and Co., are marketing Magna properties. Assets available at the April 3 auction include Gulfstream Park, Golden Gate Fields, tote service AmTote International, advance deposit wagering outlet XpressBet.com, and the Lone Star Park lease.
MI Developments could end up as the owner of these properties after placing a stocking bid of $195-million on these properties. That bid includes $136-million in current debt owed by Magna to MI Developments.
The scheduled auction notes that Magna considers this the beginning of the process. Properties including Santa Anita Park, Pimlico Race Course and Laurel Park, Remington Park, Thistledown, and Portland Meadows will not be offered on April 3.
* The Oklahoma Horse Racing Commission plans to have a Magna Entertainment representative attend its March 26 meeting to update the regulator on the bankruptcy and how it will affect Remington.
The commission’s executive director, Tino Rieger, said the commission secured the horsemen’s purse fund before Magna declared bankruptcy. The commission is interested to check on the status of breeders’ award money owed by Magna to Oklahoma.
Frank Angst is senior staff writer of THOROUGHBRED TIMES
