Racetrack firm redeals its debt

Magna Entertainment Corp., the company that owns the host track for next weekend's Breeders' Cup championship races, announced late Wednesday that it again has renegotiated about $250 million in loans.

But the company said it will not be able to sell off assets fast enough to avoid more extensions or loans. And the ability to get those extensions or loans "is not assured," the company said.

Magna is controlled by horse breeder and owner Frank Stronach, who owns Adena Springs Farm in Versailles.

Besides Santa Anita in California, where the Breeders' Cup will be run Oct. 24-25, Magna owns Gulfstream Park in Florida, Pimlico in Maryland, Remington Park in Oklahoma, and several other tracks.

In September 2007, Magna announced a plan to eliminate the company's debt but since then it has had to refinance repeatedly.

The cost of extending its $40 million line of credit from Oct. 15 to Nov. 17 and extending a $110 million bridge loan from Oct. 31 to Dec. 1 will be $2.65 million.

The bridge loan from a subsidiary of its parent company, Stronach-controlled Canadian auto parts maker Magna International, was increased $15 million, and $4.5 million already repaid in July can also be redrawn.

But further draws on the bridge loan will not be permitted after Nov. 17 unless the line of credit from its senior lender, the Bank of Montreal, is extended or replaced.

The company is in a precarious place, with its stock price at $1.25, it has a market capitalization of only $61.3 million.

A year ago, the stock price was $49.60; two years ago, it was valued at $109.60.

In the six months that ended June 30, the company lost $68 million, following on the heels of losses in 2005 ($105.3 million), 2006 ($87.4 million) and 2007 ($113.8 million). The company said then that its ability to continue as a going concern was "in doubt."

Stronach has said he is willing to sell part of Santa Anita, which is scheduled to host the Breeders' Cup again next year.

But as the company repeated in Wednesday's release, "real estate and credit markets have continued to demonstrate weakness to date in 2008 and we do not expect that we will be able to complete asset sales at acceptable prices as quickly or for amounts as originally contemplated."

The company is also dragging $578 million in accumulated deficits.