MEC Defaults On Loan For Pimlico, Laurel, Maryland Jockey Club

It Is Unclear If MEC's Financial Troubles Will Have Impact On Future Of Preakness Stakes

Magna Entertainment Corp. (MEC) Friday said that it had "defaulted on a loan for Pimlico Race Course, Laurel Park and the Maryland Jockey Club, but that the financial institutions were not yet going to take action," according to Andrea Walker of the Baltimore SUN. MEC said in a release that it "hadn't met certain financial covenants associated with the loan with PNC Bank, but it did not disclose the amount or the requirements of the loan." This is the "first time the company has disclosed troubles with a loan directly related to the Maryland properties." The "financially beleaguered company also faces deadlines on two other loans." MEC last week said that its controlling shareholder, MI Developments, is "abandoning a reorganization plan that had been criticized by the firm's minority shareholders." MEC's financial troubles have "brought uncertainty to the racing industry and the future of the Preakness Stakes" (Baltimore SUN, 2/28). In Louisville, Gregory Hall noted MEC "faces a loan payment this week and may have to file for bankruptcy if it can't come up with the money." The rejected reorganization plan "triggered a series of provisions that required Magna to repay debts sooner, including a $40[M] line of credit due Thursday." The company in an SEC filing said that "unless it can obtain waivers or find a way to raise the money, Magna won't be able to make the payment" (Louisville COURIER-JOURNAL, 3/1). BLOODHORSE.com's Ryan Conley noted it is unclear from the MEC release "exactly what loan is in default, or what effect, if any, the development may have on the company's Maryland properties" (BLOODHORSE.com, 2/28).