Magna Entertainment gets interim OK of DIP loan increase, extension

By Angela McDaniels

Tacoma, Wash., Oct. 22 - Magna Entertainment Corp. received interim court approval to enter into an amended and restated debtor-in-possession credit agreement with MID Islandi sf, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

A final hearing is scheduled for Oct. 28.

The company is seeking to increase the commitment by $26 million to $64.4 million and to extend the maturity date to April 30, 2010.

As previously reported, Magna originally obtained a commitment for $38.4 million in DIP financing from MID Islandi when it filed for bankruptcy.

The maturity date on the original DIP agreement is Nov. 6. Magna said it expects its asset sales to be completed well before the maturity date but that the process "has been clouded due to reasons beyond the debtors' control."

The company said the maturity date will automatically be extended by one month if a Chapter 11 plan has been confirmed by the court but has not yet taken effect by the maturity date.

In addition, the amended facility calls for the division of Magna's assets into three pools. The DIP agreement sets deadlines for the sale of the assets included in each pool.

Magna will pay a 3% arrangement fee, a 2% additional arrangement fee and a 1% commitment fee.

Magna, an Aurora, Ont.-based owner and operator of horse racetracks, filed for bankruptcy on March 5, 2009. Its Chapter 11 case number is 09-10720.

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