MI Developments announces amendments to Magna Entertainment bridge loan and project financing facilities
May 23 2008 - 7:15PM
PR Newswire (US)
AURORA, ON, May 23 /PRNewswire-FirstCall/ -- MI Developments Inc.
(TSX: MIM.A, MIM.B; NYSE: MIM) today announced that it and one of
its wholly-owned subsidiaries (collectively, "MID") have agreed to
amend the bridge loan (the "Bridge Loan") provided in September
2007 by MID to Magna Entertainment Corp. (TSX: MEC.A; NASDAQ: MECA)
("MEC"), as well as the project financing facilities (the "Project
Financings") provided in connection with MEC's racing and
alternative gaming facilities at Gulfstream Park racetrack in
Florida and Remington Park racetrack in Oklahoma. John Simonetti,
MID's Chief Executive Officer, stated, "With the implementation of
its Debt Elimination Plan taking longer than anticipated, MEC will
not be in a position to repay the bridge loan or a portion of the
Gulfstream Park project financing as originally contemplated.
Recently, certain MID shareholders brought forward a reorganization
proposal that would deal with our MEC investment, including the MEC
bridge loan and project financings. This proposal is currently
being considered by MID's Special Committee of independent
directors and, in the circumstances, we believe that it is in the
best interests of MID to enter into these amendments." Bridge Loan
Amendments ---------------------- The primary components of the
amendments to the Bridge Loan are: - The maturity date has been
extended from May 31, 2008 to August 31, 2008; provided, however,
that if the reorganization proposal received by MID on behalf of
various shareholders on March 31, 2008 (the "Reorganization
Proposal") does not proceed for any reason, the maturity date will
be accelerated to one month after the date on which MID gives
notice to MEC that the Reorganization Proposal is not proceeding. -
The current maximum commitment under the Bridge Loan is
approximately US$58.5 million (US$80 million original commitment
less approximately US$21.5 million repaid by MEC), of which US$49.1
million is currently outstanding. The amount available to MEC under
the Bridge Loan, as amended, will be increased by approximately
US$51.5 million (as the maximum commitment will be increased to
US$110 million). In connection with the amendments to the Bridge
Loan, MID will receive a fee of US$1.1 million (1% of the increased
maximum commitment). MID is also entitled to an additional
arrangement fee of 1% of the then current commitment if the
Reorganization Proposal has not been approved by August 1, 2008 or
if the Bridge Loan maturity date is accelerated. Project Financing
Amendments ---------------------------- In connection with the
amendments to the Bridge Loan, MID also agreed to amend the Project
Financings by extending the deadline for repayment of at least
US$100 million under the Gulfstream Park facility from May 31, 2008
to August 31, 2008 (during which time any repayments made under
either facility will not be subject to a make-whole payment). If
the Bridge Loan maturity date is accelerated, the deadline for
repayment of the US$100 million will also be accelerated to the
same date. MID Special Committee --------------------- The MID
Board approved the amendments to the Bridge Loan and the Project
Financings after considering, among other things, legal and
financial advice and a recommendation from a Special Committee of
independent directors. MID will file a material change report
immediately upon filing of this press release. The material change
report will be filed less than 21 days before the date of the
closing of the amendments, which, in MID's view, is both reasonable
and necessary in the circumstances as the terms of the amendments
were settled, and approved by MID's Board of Directors, on May 23,
2008, and MEC requires immediate funding to address its short-term
liquidity concerns. For more details on the amendments, please
refer to the material change report. In addition, the amendments to
the Bridge Loan and the Project Financings will be filed by MID on
SEDAR at http://www.sedar.com/ and on the SEC's website at
http://www.sec.gov/. Reorganization Proposal
----------------------- The Reorganization Proposal is supported by
over 50% of MID's Class A shareholders and approximately 95% of
Class B shareholders. For further details on the Reorganization
Proposal, please refer to the proposal term sheet, which is posted
on MID's website at http://www.midevelopments.com/. The proposed
reorganization would be carried out by way of a court-approved plan
of arrangement under Ontario law, requiring at least two-thirds of
the votes cast by each class of MID's shareholders in favour of the
proposal at a special meeting of shareholders to consider the
proposal. In addition, the reorganization would be subject to
applicable regulatory approvals, including those contained in
Multilateral Instrument 61-101. The proposed reorganization is also
conditional on, among other things, Magna International Inc.'s
participation in the proposed transaction. The Reorganization
Proposal contemplates MID calling by May 30, 2008 a special meeting
to consider the reorganization and closing the transaction no later
than July 30, 2008. The Board has not yet made any decisions or
recommendations with respect to the Reorganization Proposal and has
constituted a Special Committee of the Board to review and make
recommendations relating thereto. The proposal is subject to
certain material conditions, some of which are beyond MID's
control, and there can be no assurance that the transaction
contemplated by the Reorganization Proposal will be completed.
About MID MID is a real estate operating company focusing primarily
on the ownership, leasing, management, acquisition and development
of a predominantly industrial rental portfolio for Magna
International Inc. and its subsidiaries in North America and
Europe. MID also acquires land that it intends to develop for
mixed-use and residential projects. MID holds a controlling
interest in MEC, North America's number one owner and operator of
horse racetracks, based on revenue, and one of the world's leading
suppliers, via simulcasting, of live horse racing content to the
growing intertrack, off-track and account wagering markets.
Forward-Looking Statements This press release contains
"forward-looking statements" within the meaning of applicable
securities legislation. Forward-looking statements may include,
among others, statements relating to the reorganization proposal
and the terms and conditions of such proposal. Words such as "may",
"would", "could", "will", "likely", "expect", "anticipate",
"believe", "intend", "plan", "forecast", "project", "estimate" and
similar expressions are used to identify forward-looking
statements. Forward-looking statements should not be read as
guarantees of future events or results and will not necessarily be
accurate indications of whether or the times at or by which such
future events or results will be achieved. Undue reliance should
not be placed on such statements. Forward-looking statements are
based on information available at the time and/or management's good
faith assumptions and analyses, and are subject to known and
unknown risks, uncertainties and other unpredictable factors, many
of which are beyond the Company's control, that could cause actual
events or results to differ materially from such forward-looking
statements. Important factors that could cause such differences
include, but are not limited to, the risks set forth in the "Risk
Factors" section in MID's Annual Information Form for 2007, filed
on SEDAR at http://www.sedar.com/ and attached as Exhibit 1 to
MID's Annual Report on Form 40-F for the year ended December 31,
2007, which investors are strongly advised to review. The "Risk
Factors" section also contains information about the material
factors or assumptions underlying such forward-looking statements.
Forward-looking statements speak only as of the date the statements
were made and unless otherwise required by applicable securities
laws, MID expressly disclaims any intention and undertakes no
obligation to update or revise any forward-looking statements
contained in this press release to reflect subsequent information,
events or circumstances or otherwise. DATASOURCE: MI Developments
Inc. CONTACT: about this press release, please contact Richard
Smith, MID's Executive Vice-President and Chief Financial Officer,
at (905) 726-7507
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