Under the plan that had been announced last fall, MI Developments would have injected substantially more cash into Magna Entertainment, and ultimately Stronach would have taken over complete control of the racing empire. The collapse of the plan, in the wake of strong criticism -- and threats of lawsuits -- from MI Developments' minority shareholders, puts Magna Entertainment in an impossible cash position.
Without the reorganization plan, Magna Entertainment will now face accelerated repayment of a variety of loans, both to MI Developments and to outside parties such as the Bank of Montreal. The details are available in the Magna statement and in Ryan Conley's report today in the Blood-Horse online, but in broad terms, Magna Entertainment has to come up with some $275 million, at least, in March unless it can renegotiate its loans. Further details of Magna's obligations are reported by the Baltimore Sun. Something's got to give, since MEC doesn't have the cash.
Halsey Minor: if you're out there, there might be some race tracks for sale, cheap.
Update (11:39 pm): Magna also announced on Thursday that the Toronto Stock Exchange has begun an expedited review of whether Magna Entertainment stock should continue to be listed on the exchange. Despite a 1-for-20 reverse stock split last year, MEC shares are once again trading under $1, or at the equivalent of 3 cents a share if the price is adjusted for effects of the stock split. At that price, MEC may not even be trading on the penny-stock "Pink Sheets" much longer.
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