04/21/2009 12:00AM

$38M loan to Magna approved


Magna Entertainment Corp., the bankrupt racing company, received approval on Monday for $38.5 million in loans from its largest creditor and parent company so that it can continue to fund its operations while reorganizing.

U.S. Bankruptcy Court Judge Mary Walrath approved the request at a Monday hearing in Delaware, where Magna filed for bankruptcy on March 5. Magna had initially reached an agreement with its parent company, MI Developments, for $62.5 million, but the companies pared the request just prior to the hearing.

Walrath also set two hearing dates in early May to hear motions on plans for Magna to auction off its properties. The first hearing, May 4, will consider a motion for auction procedures related to Santa Anita Park, Laurel Park, Pimlico Race Course, Remington Park, Thistledown, and Portland Meadows.

The second hearing, on May 7, will consider the auction procedures for Gulfstream Park, Golden Gate Fields, Palm Meadows Training Center, the bet-processing company AmTote, and the account-wagering company XpressBet. Magna had initially planned to allow MI Developments to submit a stalking-horse bid for that bundle of properties, but the plan was scrapped just prior to the hearing due to a torrent of objections from creditors and shareholders.

Magna owes MI Developments $371 million. Pressure from shareholders and creditors will likely force the company to sell off its most valuable properties, such as Santa Anita Park, to pay down the debt.