03/31/2008 11:00PM

Magna gets loan extension


Magna Entertainment Corp., the struggling racetrack company, has reached an agreement to extend the maturity date on a $40 million loan that was due on Monday until April 30, the company announced on Tuesday morning.

The loan, which was first scheduled to come due on Jan. 31 but has been extended twice since then, is secured by a charge on the assets of Magna's Santa Anita Park and Golden Gate Fields in California, according to the company's financial statements, and held by a "Canadian financial institution." Magna was in danger of defaulting on the loan if the terms were not adjusted.

The $40 million loan is part of $209 million worth of debt that matures for Magna this year. The company, which has lost more than $500 million over the last five years, had $34 million in cash at the end of 2007, according to its 2007 financial statements.

Magna's auditors have said that the company's ability to continue to operate is in significant doubt without an improvement in its financial condition. The company's stock is facing delisting on Nasdaq unless the share price exceeds $1 for a 10-day period before Aug. 11, and the company has proposed either a 1-for-10 or 1-for-20 reverse stock split. Magna's stock closed at 45 cents on Tuesday, up 11 cents, or 32 percent.

The stock split will be voted on May 6 at a special meeting of Magna shareholders.