Magna Entertainment announces plan to eliminate debt by end of 2008

By Lisa Kerner

Charlotte, N.C., Sept. 13 - Magna Entertainment Corp. adopted several initiatives as the result of its strategic review process. The initiatives include:

• Eliminating the company's net debt by Dec. 31, 2008 through the sale of assets generating proceeds of some $600 million to $700 million;

• Arranging $100 million of funding to address immediate liquidity concerns; and

• Appointing Tony Campbell of long-term Magna investor Knott Partners Management, LLC as a new independent director.

"This plan, unanimously approved by MEC's board of directors, has now firmly and publicly set us on a course to eliminate debt and improve operations," founder, chairman and interim chief executive officer Frank Stronach said in a company news release.

"We have identified the assets to be sold outright as well as the strategic transactions involving other racing, gaming and technology operations that need to be completed to achieve our goal of being debt-free by the end of 2008."

Magna retained former CEO Tom Hodgson's firm, Greenbrook Capital Partners Inc., to help the company "accelerate the pace of asset sales."

The company said it intends to sell the Great Lakes Downs racetrack in Michigan, the Thistledown racetrack in Ohio and its interest in the Portland Meadows racetrack. It also plans to cease horse racing at the Magna Racino in Austria.

Magna plans to explore strategic transactions with other racing, gaming and technology operations, the release stated. In addition, the company will raise $20 million through a private placement of class A stock to investor Fair Enterprise Ltd.

The company expects to incur addition debt in the short term for a new $80 million bridge loan facility to help Magna meet its projected cash needs through May 2008.

Magna Entertainment, based in Aurora, Ont., owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities.

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