10/11/2009 11:00PM

Magna asks for new auction dates


Magna Entertainment Corp., the bankrupt racetrack operator, will ask a bankruptcy court judge on Wednesday to approve a January auction for its two Maryland racing properties and a February auction for its Florida and California properties, according to motions the company has filed with the court.

The request will seek approval to take bids from interested companies for Laurel Park and Pimlico Race Course in Maryland until Nov. 2, with a Jan. 8 auction for the tracks. The request also seeks to set a deadline of Feb. 10 for bidders interested in two California tracks, Santa Anita Park and Golden Gate Fields, and two Florida properties, Gulfstream Park and Palm Meadows Training Center, to be followed 15 days later by an auction for the assets.

The two new auctions resurrect plans by Magna to offer all of its properties for sale. Over the past several months, the company had not made any plans to offer the Maryland or Florida tracks through an auction process, although it had earlier scheduled and canceled a similar auction for Santa Anita Park.

Magna filed for bankruptcy in March. The company owes its parent company and largest creditor, MI Developments, nearly $400 million. It has filed a motion asking the court to approve an additional loan of $26 million from MI Developments to fund its operations while it is reorganizing, according to court documents.

Although company officials did not return phone calls on Monday, the motion requesting the auctions also indicates that MI Developments is seeking to attach conditions to its continued financing of Magna's operations. In the motion, Magna said that MI Developments will consider Magna to be in default unless the company has reached definitive deals to sell one or more of its properties for a total of $175 million by Feb. 26, 2010, along with meeting other conditions.

Magna said in a court filing that the company has already reached agreements to raise $160 million from the sale of its interests in Remington Park in Oklahoma City, Lone Star Park in Texas, Thistledown racetrack in Ohio, and two undeveloped properties in California and Florida. Of that total, however, $42 million is from the agreement to sell Thistledown, a deal that is in jeopardy of falling apart, according to a note in the motion.

Harrah's Entertainment, which reached the deal to purchase Thistledown in early September, has notified Magna that it believes that the deal can be scuttled because the Ohio Supreme Court recently ruled that slot machines could not be installed by Ohio racetracks until voters are offered the opportunity to approve the devices. According to the note, Harrah's sent a letter to Magna officials on Sept. 23 asserting that the ruling "gives it a right to terminate its purchase agreement," but the company has so far elected not to scuttle the deal "without waiving its right to terminate in the future."

Harrah's officials did not respond to requests for comment on Monday.

The uncertainty surrounding the company's ability to start paying off large blocks of its debt has almost certainly increased pressure on Magna to market Laurel Park and Pimlico Race Course, which could be attractive to casino operators because of last year's authorization of slot-machine casinos in Maryland. Under the law authorizing the machines, the racing industry in the state will receive 9 percent of the any casino's gross gambling revenue for purse subsidies, breeding awards, and capital-improvement programs.

Magna itself was disqualified from seeking a casino license earlier this year because the company failed to pay a $28.5 million licensing fee required by law at the time applications were due.