MI Developments announces changes to Magna Entertainment bridge loan and project financing facilities
October 15 2008 - 7:37PM
PR Newswire (US)
AURORA, ON, Oct. 15 /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
increase and extend the bridge loan (the "Bridge Loan") provided in
September 2007 to Magna Entertainment Corp. ("MEC") and to extend
the deadline for repayment of certain amounts under the project
financing facility provided in connection with MEC's racing and
alternative gaming facilities at Gulfstream Park in Florida. The
increase and extensions are intended to permit MID and MEC to
complete their exploration of the strategic transactions and
alternatives available in respect of MEC, including a
recapitalization, restructuring or sales of some or all of MEC's
assets, and evaluation of whether or to what extent MID might
participate in any such transactions or alternatives. The maturity
date of the Bridge Loan will be extended from October 31, 2008 to
December 1, 2008. In addition, the maximum commitment of the Bridge
Loan will be increased from US$110 million to US$125 million. MEC
will also be permitted to redraw the US$4.5 million that it repaid
in July 2008 using asset sale proceeds such that the amount
available to MEC under the Bridge Loan will be increased by
approximately US$19.5 million. US$95.9 million is currently
outstanding under the Bridge Loan. MID will also extend the
deadline for repayment of at least US$100 million under the
Gulfstream Park project financing facility from October 31, 2008 to
December 1, 2008 (during which time any repayments made under that
facility or the facility provided in connection with MEC's racing
and alternative gaming facilities at Remington Park in Oklahoma
will not be subject to a make-whole payment). In connection with
the increase to and extension of the Bridge Loan, MID will receive
a fee of US$1.25 million. MID will also receive an extension fee of
US$1.0 million under the Gulfstream Park facility. The increase and
extensions are conditional on MEC extending the maturity date of
its US$40 million senior secured revolving credit facility with a
Canadian chartered bank from October 15, 2008 to no earlier than
November 17, 2008. Draws under the Bridge Loan will not be
permitted after November 17, 2008 unless the MEC bank facility has
been further extended or replaced. The MID Board approved the
changes after considering, among other things, recommendations from
a Special Committee of independent directors. Dennis Mills, MID's
Vice-Chairman and Interim Chief Executive Officer, stated, "The
recent market disruptions have complicated the process being
pursued by MID. We are aware that not all MID shareholders may
support the need to afford MEC this limited, incremental funding,
but we believe that this is the most appropriate course of action
for MID during this challenging period. We are committed to quickly
developing and implementing a solution that is in the best
interests of MID and its shareholders." There can be no assurance
that any transaction relating to MID or MEC will be completed. 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 increase and
extensions, which, in MID's view, is both reasonable and necessary
in the circumstances as the terms thereof were settled, and
approved by MID's Board of Directors, on October 15, 2008, and MEC
requires immediate funding to address its short-term liquidity
concerns. For more details on the increase and extensions, please
refer to the material change report. In addition, the amendment to
the Bridge Loan will be filed by MID on SEDAR at
http://www.sedar.com/ and on the SEC's website at
http://www.sec.gov/. 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 that the parties may not
proceed with the reorganization proposal delivered to the Company
on March 31, 2008, and if the parties decide to proceed with a
transaction, the terms of such transaction may differ from those
that are currently contemplated by the proposed reorganization.
Other important factors are 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: please contact Dennis Mills, MID's Vice-Chairman and
Interim Chief Executive Officer, at (905) 726-7614
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