Loans tighten reins on racetrack firm
Magna Entertainment Corp. has bought more time again so it can find money or reorganize to stay alive.
MI Developments Inc., which controls MEC, said yesterday it will extend repayment of $180 million (U.S.) in two loans to the end of October.
MEC also gained a one-month extension to the maturity date on a $40-million revolving credit line with a major bank. That was a condition of getting the other two extensions.
The company, which has major interests in horse racetracks and corresponding gambling and broadcasting assets, is on the brink of collapse unless it can raise cash for operations or restructure.
"MEC requires immediate funding to address its short-term liquidity needs," the firm said in a statement explaining the extensions.
Under terms of the deals, MEC must pay $527,000 for the extension of one $80-million bridge loan and another $400,000 on the $40-million credit line.
The other loan involves $100 million in financing for MEC’s Gulfstream racetrack expansion.
The extra time will allow MEC to find alternatives to a reorganization proposal that would have led to founder Frank Stronach and an investment group buying out the interests of MI investors in the racetrack firm for about $25 million.
"This short-term extension of the bridge loan allows us to remain focused on attempting to develop a compromise solution that is in the best interests of MID .. paydayloan. with the necessary stakeholder support," Dennis Mills, MI interim chief executive officer, said in a statement.
MI shareholders have called the buyout idea and accompanying proposals "an outrageous payoff" to Stronach. One shareholder calculated the complex deal would leave Stronach, who built his fortune at auto parts powerhouse Magna International, with a package worth $329 million.
Filed under: news by Pascal