02/18/2010 1:00AM

Magna files financial plan


Magna Entertainment, the bankrupt racing company, filed a reorganization plan on Thursday in a Delaware bankruptcy court that envisions the company transferring many of its most valuable assets to its parent company.

Magna had previously announced details of the reorganization plan in early January, after reaching a settlement with its unsecured creditors' committee over a lawsuit the committee filed. The court has scheduled a March 23 hearing to consider approval of the plan filed Thursday.

Under the plan, Magna would transfer Santa Anita Park, Golden Gate Fields, Gulfstream Park, Palm Meadows Training Center, the bet-processing company AmTote, the account-wagering company XpressBet, and Magna's 50 percent stakes in HorseRacingTV and TrackNet to MI Developments, its parent company and largest creditor. In exchange, hundreds of millions of dollars in Magna debt held by MI Developments would be wiped out.

Both Magna and MI Developments are controlled by Frank Stronach, the multiple Eclipse Award-winning owner and breeder.

The creditors' committee would receive at least $95 million in cash from existing funds under the plan, and it will receive half the amount of money in excess of $20 million from a planned auction of Magna's Laurel Park and Pimlico Race Course in Maryland. The tracks are scheduled to go to auction on Feb. 23, though previous auction dates have been delayed on multiple occasions.

As part of the plan, the creditors' committee's lawsuit against Magna will be dropped. The lawsuit alleged that Magna officials engineered loans from MI Developments at a time when they knew that Magna would file for bankruptcy, allowing MI Developments to leapfrog ahead of other creditors. A member of the unsecured creditors' committee has said that the committee accepted the terms of the settlement because the committee had grown skeptical that Magna would be able to pay off any portion of its $200 million in unsecured debt under a previous asset-sales plan.

In a release, MI Developments said on Thursday that it would announce "funding limitations or other restrictions" on its support of the Magna properties prior to the reorganization date. Shareholders of MI Developments have bristled at the company's involvement with the racing industry.