03/31/2009 11:00PM

Magna to push back financing hearing


Magna Entertainment Corp. plans to ask a Delaware bankruptcy judge to put off by several weeks the consideration of several motions that are currently scheduled for a hearing on Friday, including the approval of a plan to auction off its properties, according to court filings and an official involved in the bankruptcy.

If the company's request is approved, a hearing to consider the motions, which have drawn objections from a handful of creditors and related parties, would likely be held in two to three weeks, according to the official, who did not wish to be identified because he is not authorized to speak on the issue. The official said that Magna wished to delay the hearing on the motions under consideration because several parties involved in the bankruptcy reorganization needed more time to formulate responses to the objections.

Hearings to consider motions in bankruptcy court are commonly delayed for a variety of reasons.

When Magna filed for bankruptcy on March 5, the company said that it had reached an agreement with its parent company, MI Developments, for $62.5 million in financing to help with its reorganization. In addition, the company asked the court to approve two separate plans to auction off its properties. One of the plans included an agreement whereby MI Developments would submit a $195 million stalking-horse bid for a bundle of Magna properties, including Gulfstream Park, Golden Gate Fields, Lone Star Park, AmTote, and XpressBet.

In a court filing on Wednesday listing the motions to be discussed on Friday, Magna said it expected to reach an agreement with the court to discuss amended motions at "a hearing date to be determined" and said that the company would file an amended agenda when those agreements were reached.

Objections to the motions were due on March 27. A number of entities, including Churchill Downs Inc., the state of Maryland, and Greenlight Capital, a large minority shareholder of MI Developments, filed objections. In particular, Greenlight filed a motion contending that the auction rules sought by Magna would have a "chilling" effect on bidding and effectively guarantee that MI Developments would buy the properties.

The bankruptcy court has already approved $13.4 million of the $62 million being sought by Magna from MI Developments, and Magna was seeking the remainder of the financing under the motion scheduled to be heard on Friday. Greenlight is among a number of parties to have objected to the financing agreement as well.