07/25/2006 11:00PM

Magna says it will buy Amtote


Magna Entertainment Corp., the Toronto-based racetrack owner, has purchased an additional 30 percent stake in the bet-processing company Amtote and has notified Amtote officials that it intends to exercise an option to acquire 100 percent of the company, Magna announced Wednesday.

Magna already owns 30 percent of Amtote, one of three companies that process the vast majority of wagers in North America. The company said that it expects to spend $14.3 million by Nov. 25 to acquire the remaining shares of the company, which are privately held.

The Amtote announcement was one of three made by Magna late Wednesday after the stock markets closed. Magna also said that it was taking out an additional loan from its parent company, MI Developments, to fund a renovation at Gulfstream Park for a casino, and that it had modified an agreement to sell the Meadows harness track in Pennsylvania for a lower price.

Magna is the largest racetrack operator in the United States. In the first quarter of 2006, the company posted its first quarterly profit in two years, $2.2 million. In the three years before that quarter, Magna lost $320 million while racking up a $145 million debt to MI Developments.

According to a release from Magna, Amtote had net income of $3 million in its most recent fiscal year, which ended on Feb. 25. If the transaction closes, Magna would be the first racetrack company to own a totalizator company outright. Bet-processing functions in North America are dominated by three companies: Scientific Games Racing, United Tote, and Amtote.

At Gulfstream Park, Magna will spend $25.75 million in additional money provided by MI Developments to build a casino that will house 500 slot machines. Two years ago, Magna tore down the old grandstand at Gulfstream and rebuilt the track at a cost of $170 million.

The loan will bear interest at 10.75 percent annually, and MI Developments will be entitled to 75 percent of Gulfstream's "excess cash flow" each year to pay down the debt, Magna said.

In Pennsylvania, Magna said that its agreement to sell the Meadows to a company owned by the real-estate developers and casino operators William Paulos and William Wortman had been amended to reflect a sales price of $200 million, instead of $225 million, because of increased tax obligations under Pennsylvania's slot-machine regulations.

The sale is still contingent on the Meadows receiving a slot-machine license later this year, as was the earlier agreement, Magna said.

Magna has said that it intends to use proceeds from the sale of the Meadows to pay down its debt to its parent company.