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Wednesday
April 2, 2008
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Finance

Stronach Expects Magna To Be Profitable Within Three Years

Stronach Believes He Can Make MEC
Profitable With Refinancing Proposal
Magna Entertainment Corp. (MEC) Chair Frank Stronach said that his refinancing proposal to purchase the 59% stake in MEC held by parent company MI Developments Inc. (MID) "should help make [MEC] profitable within two to three years," according to Greg Keenan of the Toronto GLOBE & MAIL. But Stronach added that the US$247M in debt being "transferred out of [MID] needs to be converted to equity if MEC is going to be turned around." Stronach said that MEC, a racetrack and gambling company, needs "more freedom from government regulations that limit when races at its tracks in California, Florida, Texas and Maryland can be run." Stronach compared the limits on the number of racing days to "telling a chef that he can only open his restaurant" from 2:00-5:00am. Stronach: "The greatest problem is (that) racing is not free enterprise. We've got to be able to be open when we think we have the most customers." Keenan notes MEC's Gulfstream Park in Florida in '07 "held races on 88 days," while Baltimore's Pimlico opened for racing "on just 31 days." Stronach added that Gulfstream Park will "represent what the company's vision of racetrack and surrounding shopping complex and residential developments should be" (Toronto GLOBE & MAIL, 4/2).

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