Saturday, August 16, 2008

Magna Gets a (Short) Breather

Magna Entertainment scrambled and managed to negotiate a one-month extension of the loans that were due this month, according to a report in the Daily Racing Form.

In addition to intra-company loans within Frank Stronach's Magna empire, MECA also got an extension from the Bank of Montreal, which was due to have some of its $40 million paid back by yesterday. The bank's estimate of Magna's creditworthiness is illustrated by the 16.2% interest rate that it's charging on the loan. Not exactly prime-rate territory.

I'm not sure what good this doies in the long run, since it's unlikely that Magna can raise significant revenue by the new due date, September 15th, but perhaps it gives Frank Stronach time to decide if he wants to put his own, personal money into the company, rather than continuing with plans to use funds from other Magna companies that have those pesky minority shareholders.

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