Magna Entertainment Corporation, the Canadian owner and operator of racetracks and a leading supplier via simulcasting of live content, has announced that it will not be proceeding with a previously announced reorganisation proposal.
The revelation came following meetings between Magna and its controlling shareholder, MI Developments Incorporated, with the Ontario firm warning that there is no assurance that any alternative transactions would be completed.
In November, Magna reported a loss in net incomes from continuing operations for the third quarter of $50.58 million while it owed $2.22 million on discontinued operations. In total, it reported a net loss of $48.35 million, which was slightly improved over last year’s $49.81 million.
Magna revealed that it currently has two groups of loan agreements from a subsidiary of MI Developments that it must pay off for a total of $100 million. These deals were signed in December in connection with the reorganisation proposal under the Gulfstream project financing facility.
The first part is due on March 20 but Magna still owes $48.5 million while the second tranche matures on May 13 with approximately $700,000 still outstanding. In addition, the Aurora-based firm revealed that there is around $126.2 million outstanding under a bridge loan agreement and, in accordance with its terms, the maturity date of its $40 million credit facility with a Canadian chartered bank will also be accelerated to March 5.
“If Magna Entertainment Corporation is unable to repay its obligations when due or satisfy required covenants in its loan agreements, substantially all of its other current and long-term debt will also become due on demand as a result of cross-default provisions within loan agreements unless Magna Entertainment Corporation is able to obtain waivers, modifications or extensions,” read a statement from Magna.
“In the event Magna Entertainment Corporation is unsuccessful in its efforts to raise additional funds through an alternative transaction with MI Developments, assets sales, by taking on additional debt or by some other means, Magna Entertainment Corporation will not be able to meet such obligations.”