SBD/Issue 222/Facilities & Venues

Magna May Sell Controlling Stake In Santa Anita To Offset Debt

Magna Entertainment May Sell Controlling Stake
In Santa Anita Park To Help Pay Down Debt
Magna Entertainment Corp. (MEC) Chair Frank Stronach yesterday said that he is "prepared to pay down debt by selling a controlling stake" in Santa Anita Park, according to Steve Ladurantaye of the GLOBE & MAIL. The track, which Stronach had previously said he would not sell, is worth an estimated $500M (all figures U.S.). Stronach during MEC's Q2 conference call said, "We do have high debt and we may find that we have to sell 50 or 60[%] of Santa Anita." MEC owes $577.8M, and a Santa Anita sale "could appease disgruntled investors, who have suggested a sale would be the easiest way to balance the books." Ladurantaye notes the sale would allow MEC to "focus on its core holdings," including Gulfstream Park and Pimlico Race Course (GLOBE & MAIL, 8/7).

SEEING RED: In Toronto, Tony Van Alphen reports MEC yesterday revealed that it "won't keep earlier pledges to eliminate its heavy debt load by the end of the year and may never do so." MEC yesterday reported a Q2 loss of $21.3M, an improvement from the $23.4M loss for the year-ago period, but for the first time acknowledged that the "continuing weakness in the U.S. real estate and credit markets will mean it won't meet a deadline for selling assets to wipe out liabilities of more than" $850M. MEC's revenue in the quarter, $166.3M, was down from $167.4M in the year-ago period (TORONTO STAR, 8/7). In Baltimore, Sandra McKee reports while the total Q2 loss "was in line with past performances," MEC's $4.4M quarterly loss in Maryland alone was "unusual because it came in the quarter that includes the Preakness Stakes," which is run at Pimlico. The Maryland losses are being "primarily attributed to a 12[%] loss in handle, a Preakness betting decline of $13.7[M] from 2007 and a loss of $1.7[M] in maintenance contributions from" the Maryland Thoroughbred Horsemen's Association (MTHA). The Maryland Jockey Club (MJC) yesterday also said that it will cut Laurel Park's fall meet by 11 days, following news earlier this week that the MTHA will "not fund the state's six major fall stakes races." The MJC yesterday also confirmed that it is "closing the barn area at Pimlico" effective August 31, pending approval by the Maryland Racing Commission at its August 19 meeting (Baltimore SUN, 8/7). MJC President & COO Tom Chuckas said that Pimlico "would reopen for stabling and training during its spring meet, but horsemen may not be willing to return for just a six-week period" (WASHINGTON POST, 8/7).

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