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Fifth Third Bank sues racehorse owner Zayat for $34 million

Ahmed Zayat, the leading Thoroughbred racehorse owner in North America last year and breeder of this year's Kentucky Derby second-place finisher, has been sued in Lexington by Fifth Third Bank. The bank alleges Zayat owes more than $34 million.

Besides Pioneerof the Nile, who finished second in the Derby, Zayat owned such runners as Zensational, Point Ashley, Baroness Thatcher, Thorn Song and Soul Warrior.

Fifth Third's lawsuit was filed Tuesday in U.S. District Court. The suit claims that Zayat, through Zayat Stables and Pioneer of the Nile Ltd., defaulted on loans by failing to make payments due March 1, 2009, and July 31, 2009.

Fifth Third said it notified Zayat in August that the loans were in default and asked for financial information, which has not been provided. The bank also demanded revenue from the equine collateral on the loan — including purse money, stallion service fees, breeder's awards and sales proceeds — to pay down what Zayat owes.

Zayat Stables granted the bank a security interest in bloodstock and stallion shares.

As of Dec. 14, Zayat and his associated entities owed $34,265,970, plus $190,505.11 in interest, according to the suit.

The bank also said that Zayat "has refused to allow consultants designated by Fifth Third to assist in evaluating Zayat Stables, even though such action is explicitly provided for in the Security Agreement."

Ronald S. Brody, a New York attorney for Zayat, did not return a call Wednesday for comment.

Craig Robertson, Lexington attorney for Fifth Third, said the bank "does not comment on pending litigation."

According to the National Thoroughbred Racing Association, Zayat owns 276 horses, including 170 in training among a variety of trainers, including Steve Asmussen.

At Keeneland's September yearling sale, Zayat Stables was the seventh leading buyer, signing tickets for 21 yearlings for a total of $3,064,000. At last year's sale, Zayat bought 30 yearlings for $6,732,000.

Jay Blanton, spokesman for Keeneland, said Wednesday of Zayat, "He is in good standing with Keeneland. He has met all his present commitments to us."

In 2008, Zayat Stables was the leading Thoroughbred owner by earnings, winning almost $6.9 million and 116 victories. So far this year, Zayat is in third place with more than $6.2 million in earnings and 111 victories.

Zayat bred Pioneerof the Nile, who was retired with a leg injury and will stand at stud at Vinery for $20,000. Zayat has said he retained 50 percent interest in the stallion and planned to send mares to him.

Zayat purchased the sprinter Zensational in 2008 for $700,000. Zensational was retired this year and syndicated as a stallion; he will stand at Hill 'n' Dale Farm next year for $25,000. Zayat said he plans to send the dam of Pioneerof the Nile to Zensational next year.

According to his NTRA bio, Zayat made his fortune on the sale to Heineken International of Al Ahram Beverages Company, the largest beverage manufacturer and distributor in the Middle East. Zayat is also listed as the largest shareholder in Misr Glass Manufacturing, the biggest manufacturer of glass containers in Egypt. He is Egyptian by birth and has residences in New Jersey, Egypt and London.

Zayat made a splash in the Thoroughbred business in 2005 when he bought Maimonides at the Keeneland September yearling sale for $4.6 million. The next summer, he bought Mushka, the sale topper at the Fasig-Tipton Saratoga sale, for $1.6 million.

He had five starters at the 2007 Breeders' Cup. Baroness Thatcher finished fourth in the Filly & Mare Sprint.

In 2008, Zayat sold 70 horses at the Keeneland November sale, including Baroness Thatcher, who sold for $1.8 million; Mushka, who sold for $2.4 million; and J Z Warrior, who sold for $1.125 million.

Zayat Stables is registered in Delaware; Pioneer of the Nile Ltd. is registered in the British Virgin Islands.

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