NEWS
Key Magna bankruptcy hearing to be contentious
Posted: Tuesday, March 31, 2009 3:24 PM
by Frank Angst
Objections to bankrupt racetrack owner Magna Entertainment Corp.’s initial proposal to sell its properties surged in the past several days, which could lead to a contentious upcoming hearing.
In advance of a hearing scheduled for Friday, several key players filed objections to Magna’s sale proposals in United States Bankruptcy Court for the District of Delaware. Friday’s hearing aims to determine how properties, including all of Magna’s tracks, will be sold in the coming months.
One objection filer is Churchill Downs Inc., co-owner with Magna of TrackNet Media, which markets racing signals to advance deposit wagering outlets, and racing channel HorseRacing Television. Churchill objects to any plan to sell or transfer ownership of either of these interests based on its agreements.
Churchill noted on March 9 that Magna filed a sale motion on both assets as well as limited liability company memberships relating to the joint ventures. Churchill also objects based on a lack of clarity on what interests Magna is trying to sell.
Magna’s parent company, MI Developments Inc., plans to submit a stalking bid of $195-million that would include racetracks Gulfstream Park, Golden Gate Fields, and the Lone Star Park lease as well as tote service AmTote International, and advance deposit wagering outlet Xpressbet.com.
That plan also will be disputed. Greenlight Capital Offshore Partners, a major shareholder in MI Developments, said the stalking bid would hurt Magna’s chances at getting the best price for its properties.
Greenlight said the stalking bid and a debtor-in-possession credit agreement give MI Developments too much control over the proposed Magna sale. Frank Stronach is chairman and controls Magna Entertainment and MI Developments.
Greenlight argues the proposal would assure MI Developments will be the successful bidder and undermine a full and fair auction of its assets, saying the plan would, “inhibit and chill bidding.” In its objection, it called for a controlled sale of all or substantially all of the debtors’ assets.
Also Friday, the court will begin to accept bids on all other Magna properties, including the Maryland Jockey Club properties, Santa Anita Park, Thistledown, Remington Park, and Portland Meadows. Under the plan, Magna would accept bids until July and announce winners on August 7.
PNC Bank, a major creditor, has called for this sale to be expedited. It said the Maryland Jockey Club properties would yield more value if they were sold before this year’s Preakness Stakes (G1). In PNC’s filing, it is clear the bank believes the Preakness could be sold as a separate property, which potentially could facilitate moving the race from Pimlico Race Course.
The State of Maryland has filed objections to Magna’s sale plans, noting the current bidding procedures ignore the state’s statutory right to match any offer for the sale of the Preakness. The 19-page document also cites several other regulatory concerns.
Other creditors and interested parties that have filed objections to the bidding process include Magna harness track, The Meadows; Heritage Racing, a potential bidder on the properties; the City of Baltimore; and creditors Wells Fargo Bank, Bank of Montreal, SunTrust Bank, Village at Gulfstream Park, and FC Gulfstream Park.
To view stories related to Magna's filing of bankruptcy, click here.
Frank Angst is senior writer for THOROUGHBRED TIMES
