11/13/2009 12:00AM

Magna names no lead bidder in Maryland

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Magna Entertainment Corp., the bankrupt racetrack operator, will not name a lead bidder in its ongoing process to auction off its two Maryland racetracks, Laurel Park and Pimlico Race Course, according to a lead official in the court's bankruptcy reorganization.

Michael Wildish, an official with Magna's bankruptcy consulting firm, Miller Buckfire, said that Magna dropped its plan to name the lead bidder, or "stalking horse," after concluding that Magna would not have been willing to accept the most valuable bid submitted for the properties. Wildish said that the low value of the bid was not indicative of a lack of interest in the two properties, but rather the intricacies of conducting an auction in which a stalking-horse bid is used as the starting point.

"It's sometimes a good tactic to name a stalking horse, but not when it's a deal that you wouldn't be willing to make," Wildish said.

The auction of the two Maryland properties is still scheduled for Jan. 8, Wildish said. In addition, Magna plans to submit a list of qualified bidders to the bankruptcy court on Dec. 4, though the company may apply for an extension, "though not longer than a week," Wildish said.

The auction of the Maryland properties is critical to Magna's plan to reorganize. The company owes its largest creditor and parent company, MI Developments, more than $430 million, and the company needs to raise $175 million from sales of its properties by early next year or face the possibility of defaulting on loans it has received to continue operating while under the protection of the bankruptcy court.

So far, Magna has reached deals to sell three of its tracks, but the total sales prices are short of the $175 million threshold.