With Preakness Set For Saturday, MEC’s Future Looks Suspect
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Pimlico Owner Magna Entertainment
Facing Financial Struggles
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Magna Entertainment Corp.’s (MEC) debt has “piled up as operating losses soared, and its finances are in such bad shape that its auditors question whether it can stay in operation,” according to Mike Himowitz of the Baltimore SUN. Magna Int’l Chair Frank Stronach has “almost dictatorlike control of the public companies because of the blocks of super-voting shares he holds in each.” Stronach biographer Wayne Lilley: “He has a [BOD], but they’re there for his pleasure. They are just window dressing. He does what he wants.” SEC filings show Stronach has “not been bashful about transferring assets among his companies to keep his bet on the future of horse racing alive.” MEC’s March 31 SEC filing stated, “The company’s ability to continue as a going concern is in substantial doubt and is dependent on the company generating cash flows that are adequate to sustain the operations of the business, renew or extend current financing arrangements and maintain its obligations with respect to secured and unsecured creditors, none of which is assured.” Last week, MEC reported Q1 profit of $2.5M, or $0.02 per share. Revenue grew 2% to $284.2M, with the help of gambling income from Gulfstream Park. The company also has simulcasting and OTB interests. Magna reps did not return calls seeking comment (Baltimore SUN, 5/17).
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