Magna parent's net income drops

MI Developments, the parent company of the bankrupt racetrack operator Magna Entertainment Corp., had net income of $11.7 million in 2009, a sharp decline from 2008 net income of $132.2 million, according to financial documents released by the company on Monday night.

Revenue during the year for the company was $224 million, compared with revenue of $219.1 million in 2008, according to the financial documents. MI Developments' principal source of revenue is rent collected from properties owned by Magna International Inc., an auto-parts company whose chairman and founder, Frank Stronach, is also the controlling shareholder of both Magna Entertainment Corp. and MI Developments. Stock in Magna Entertainment ceased trading shortly before the company filed for bankruptcy on March 5, 2009.

During the year, MI Developments posted a loss of $54.8 million from the continuing operations of Magna Entertainment, according to the documents, largely because of the impairment of loans MI Developments provided to Magna Entertainment. When those losses are included in the 2009 results, net loss for the year was $43.2 million. Last year, MI Developments posted a loss of $124.9 million from Magna's continuing operations.

MI Developments is the largest creditor of Magna Entertainment and provided funding to the company to continue its operations while under the protection of the bankruptcy court. Under a reorganization plan currently being considered by the court, MI Developments will take control of most of Magna's remaining assets later this year, including Santa Anita Park, Gulfstream Park, Golden Gate Fields, Laurel Park, Pimlico Race Course, and the account-wagering company XPressBet. The asset transfers will wipe out Magna Entertainment's debt to MI Developments, along with some cash considerations related to several pending sales of Magna tracks.

Under the reorganization plan, MI Developments has said it will draft "funding limitations or other restrictions" regarding its management of the racetrack properties.