Magna parent to acquire Maryland Jockey Club under amended plan

By Caroline Salls

Pittsburgh, March 23 - Magna Entertainment Corp. filed an amended plan of reorganization and related disclosure statement Tuesday with the U.S. Bankruptcy Court for the District of Delaware to provide for the transfer of the Maryland Jockey Club to parent company MI Developments Inc., according to a company news release.

Rather than being sold by Magna through an auction as originally contemplated, MI Developments said Maryland Jockey Club will form part of Magna's assets that are to be transferred to the parent company under the amended plan.

Under the amended plan, MI Developments will pay the estimated $23 million to $25 million of secured and unsecured claims of Maryland Jockey Club's creditors in return for the transfer.

Also under the amended plan, the amount to be paid by MI Developments to Magna's non-Maryland Jockey Club unsecured creditors will be increased to $89 million from $75 million.

"We are excited about the development opportunities represented by the land owned by MJC," MI Developments vice chairman and chief executive officer Dennis Mills said in the release.

"The land is comprised of 565 acres in three major properties well located in the greater Baltimore-Washington area."

According to the release, the acquisition of Maryland Jockey Club will be subject to forbearance terms that will require that the club's racing operations be brought to a break-even status within three years and that accumulated budgeted losses during that period will not exceed $15 million without approval from a special committee.

In addition, any future gaming operations at Maryland Jockey Club will not be developed other than in combination with an experienced and financially secure gaming co-venturer on terms acceptable to the special committee.

The amended plan is subject to confirmation by the U.S. Bankruptcy Court for the District of Delaware. Magna, MI Developments and Magna's official committee of unsecured creditors have entered into a plan support agreement, and Magna has agreed to seek confirmation of the amended plan by April 30.

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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