AURORA, Ont. - Horse racetrack operator Magna Entertainment Corp. has filed for bankruptcy protection and plans to sell assets under a major reorganization.
Magna Entertainment, or MEC, a spinoff of auto parts giant Magna International (TSX:MG.A), said Thursday it has filed under Chapter 11 in the U.S. and will also file to have that creditor protection extended in Canada.
"Simply put, MEC has far too much debt and interest expense," said MEC chairman and CEO Frank Stronach, founder of the Magna auto parts empire.
"MEC has previously pursued numerous out-of-court restructuring alternatives but has been unable to complete a comprehensive restructuring to date due, in part, to the current economic recession, severe downturn in the U.S. real estate market and global credit crisis."
The racetrack company said it has secured a US$62.5-million financing from MI Developments (TSX:MIM.A), the real estate company that owns a majority stake in MEC and is itself another Magna International spinoff.
The company said the financing will allow it to run its day-to-day operations and pay employees.
MEC said MI Developments has agreed to pay US$195 million for its interests in the Golden Gate Fields, Gulfstream Park, Palm Meadows Training Center and Lone Star Park tracks as well as betting technology businesses XpressBet and AmTote International.
