Adjournment of Magna Entertainment chapter 11 bankruptcy hearing
April 03 2009 - 5:04PM
PR Newswire (US)
AURORA, ON, April 3 /PRNewswire-FirstCall/ -- MI Developments Inc.
(MID) (TSX: MIM.A, MIM.B; NYSE: MIM) today announced that Magna
Entertainment Corp. and certain of its subsidiaries that have filed
voluntary petitions for relief under chapter 11 of the United
States Bankruptcy Code (collectively, "MEC" or the "Debtors")
requested an adjournment until April 20, 2009 for the United States
Bankruptcy Court for the District of Delaware (the "Court") to
consider various motions filed with the Court. The hearing on such
motions is now scheduled for April 20, 2009, and at that time the
Court will consider (i) the entry of a final order with respect to
the secured debtor-in-possession financing facility (the "DIP
Loan") that a wholly-owned subsidiary of MID (the "MID Lender") has
agreed to provide to the Debtors and (ii) the entry of an order in
connection with bid and auction procedures (the "Bid Procedures
Orders") for assets that the Debtors seek to market and sell,
including those assets that are the subject of the stalking horse
bid from MID announced on March 5, 2009. The DIP Loan initial
tranche of up to US$13.4 million was made available to the Debtors
on March 6, 2009 pursuant to approval of the Court. An interim
order approving the initial tranche was subsequently entered by the
Court on March 13, 2009. On April 3, 2009, the Court approved an
additional US$2.5 million being made available to the Debtors under
the DIP Loan pending the April 20, 2009 hearing, when the Court
will consider the entry of a final order on the DIP Loan and, if
approved, a second tranche of up to US$46.6 million will be made
available to the Debtors. Through the Bid Procedures Orders, the
Debtors, with assistance from their outside financial advisor and
investment banker, Miller Buckfire & Co., LLC, seek to conduct
a Court-supervised marketing and sale process for all or
substantially all of MEC's assets. On March 5, 2009, MID entered
into an agreement with MEC to purchase MEC's relevant interests
associated with the following assets (the "Stalking Horse Bid"):
Golden Gate Fields; Gulfstream Park, including MEC's interest in
The Village at Gulfstream Park(TM) (a joint venture with Forest
City Enterprises, Inc.); Palm Meadows Training Center and related
excess lands; Lone Star Park; AmTote; XpressBet(R); and a holdback
note associated with MEC's sale of The Meadows in 2006. MID's
aggregate offer price for these assets is approximately US$195.0
million, with US$136.0 million to be satisfied through a credit bid
of the MID Lender's existing loans to MEC, US$44.0 million in cash
and US$15.0 million through the assumption of a capital lease.
MID's Stalking Horse Bid may be topped by third parties during this
auction and any sale of assets to MID or any third party will be
subject to approval by the Court. MID has not made an offer to
purchase any other assets of MEC at this time, although MID will
continue to evaluate whether to do so during the course of the
chapter 11 process. Concurrent with the adjournment, MID, the MID
Lender and MEC agreed to certain modifications and waivers to (i)
the DIP Loan to allow for the adjournment and (ii) the purchase
agreement for the Stalking Horse Bid to provide for the ability of
MID or MEC to terminate the Stalking Horse Bid should the Ontario
Securities Commission determine that the approval of MID's minority
shareholders is required in respect of the Stalking Horse Bid or
any of the transactions provided for therein, provided that this
termination right cannot be used if MID elects to call a meeting of
shareholder to seek such minority approval (unless the approval is
not obtained at such meeting). MID holds a majority equity interest
in MEC and the MID Lender is the largest secured creditor of the
Debtors. The current balance of the MID Lender's existing loans to
the Debtors, including accrued interest, is approximately US$372
million, comprised of US$171 million under the Gulfstream Park
project financing, US$23 million under the Remington Park project
financing, US$125 million under the bridge loan provided in
September 2007, and US$53 million under the loan provided in
December 2008. All of these loans are secured. The ultimate
recovery to MID as a stockholder of MEC, if any, in the Debtors'
chapter 11 proceedings will likely not be determined until
confirmation of a plan of reorganization for MEC. In this regard,
however, such a plan is likely to result in MID not receiving any
value for its existing MEC stock and in the cancellation of such
stock. Furthermore, no assurance can be given as to the treatment
the MID Lender's claims will receive in the Debtors' chapter 11
proceedings, although, as a general matter, secured creditors are
entitled to priority over unsecured creditors to the extent of the
value of the collateral securing such claims. The restructuring of
MEC under the protection of Chapter 11 is subject to certain
material conditions, some of which are beyond MEC's and MID's
control. There is no certainty with regard to how long the chapter
11 proceedings or the process for the marketing and sale of the
Debtors' assets will take, whether the Debtors' restructuring plan
will be successful, whether or at what prices the Debtors' assets
will be sold, whether the Stalking Horse Bid or any other offer by
MID or any third party for the Debtors' assets will materialize or
be successful, and as to the outcome of litigation or regulatory
proceedings, if any, related to the chapter 11 proceedings or MID's
involvement therein (including as a result of objections raised at
the Court and with the Ontario Securities Commission). 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 majority 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. As noted in
this press release, MEC has filed a voluntary petition for
reorganization under chapter 11 of the Bankruptcy Code.
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 chapter 11 proceedings and
MID's participation therein. 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 and uncertainties inherent in the chapter 11 process,
including the auction of MEC's assets, and the risks that are set
forth in the "Risk Factors" section in MID's Annual Information
Form for 2008, 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, 2008, 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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