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Magna, MI Developments unit agree in principle to settle lawsuit
By Caroline Salls
Pittsburgh, Jan. 11 - Magna Entertainment Corp. and MI Developments Inc. subsidiary MID Islandi sf. have agreed in principle to the terms of a settlement and release with Magna's official committee of unsecured creditors in connection with a lawsuit filed by the committee, according to an MI Developments news release.
Under the settlement agreement, in exchange for the dismissal of the lawsuit, Magna's unsecured creditors will receive $75 million in cash plus $1.5 million as a reimbursement for lawsuit-related expenses.
In addition, the parties have agreed that MI Developments will receive the first $20 million of the proceeds of the sale of the company's Thistledown property, and Magna's unsecured creditors will receive the rest.
MI Developments will also receive the first $20 million of the proceeds from the sale of the Maryland Jockey Club property, with MI Developments and the unsecured creditors splitting any excess proceeds.
Upon the sale of Magna's Lone Star Park property, Magna's unsecured creditors will receive the first $20 million of proceeds, and MI Developments will receive the rest.
MI Developments said it will also have the right to receive the assets or proceeds from the sale of Portland Meadows.
Also, MI Developments, Magna and the committee have all agreed to support a plan of reorganization under which the remaining assets of Magna will be transferred to MI Developments, including Santa Anita Park, Golden Gate Fields, Gulfstream Park, AmTote International, Inc. and XpressBet, Inc.
The settlement agreement is subject to the negotiation of definitive documentation and confirmation of Magna's reorganization plan.
The settlement has been approved by MI Developments' board of directors.
Magna, an Aurora, Ont.-based owner and operator of horse racetracks, filed for bankruptcy on March 5, 2009 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 09-10720.
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