Magna Entertainment (MEC) was placed in Chapter 11 bankruptcy protection in the United States in March. Under a restructuring deal announced yesterday, unsecured creditors owed as much as $260-million (U.S.) would collect at least $96.5-million.
In return, the Stronach-controlled MI Developments would take over three horse racing venues in the United States - Golden Gate Fields and Santa Anita Park in California and Gulfstream Park in Florida - as well as a betting company.
"It's a positive development, we believe, for all the stakeholders," said Dennis Mills, chief executive officer at MI Developments. "This was a long discussion between the creditors and our advisers, with literally hundreds of hours of analysis leading to what we got done today."
The plan will be filed in court on Feb. 12. Since filing for protection, the company has been selling tracks to help service about $958-million in debt.
MEC will pay the unsecured creditors $76.5-million. Two more tracks will be sold as part of the deal - Pimlico Race Course and Laurel Park, both in Maryland. If the tracks fetch more than expected, the money would go to unsecured creditors. "It is a fairly complicated plan, but it is one we think we have a general grasp on," creditors' lawyer Kenneth Eckstein told a Delaware court yesterday.
The company's bankruptcy protection ended a 10-year project by Mr. Stronach to purchase some of the most prestigious racetracks in North America and transform them into grandiose entertainment and shopping hubs. He hasn't given up on the dream entirely - in November he reached a $10.3-million deal to buy Magna Racino in Vienna. The property wasn't included in the bankruptcy filing.
"I didn't want to see the thing go bankrupt there, so I bought it personally," he said after making the purchase.
Just before MEC entered bankruptcy protection, Mr. Stronach tried to orchestrate a deal to transfer the company to himself.
The deal never went through, and the company's plans to refinance by selling surplus real estate was made impossible by the deep recession in the United States.