MI Developments expects Magna to miss loan payments; chairman feels Magna can 'turn things around'

By Caroline Salls

Pittsburgh, Nov. 7 - MI Developments Inc.'s management does not expect Magna Entertainment Corp. to be able to repay its $125 million bridge loan from MI on Dec. 1 or make a required $100 million repayment under a Gulfstream Park project financing facility, according to a news release.

MI said its management also expects Magna to need to seek extensions from existing lenders and additional funds in the short-term from one or more possible sources, which may include MI Developments.

According to the release, if Magna is unable to repay its obligations, satisfy required covenants in its debt agreements or obtain waivers, modifications or extensions, substantially all of its current and long-term debt will also become due on demand as a result of cross-default provisions.

If these efforts are unsuccessful, MI said Magna could be required to either liquidate assets as quickly as possible to raise funds or seek protection from its creditors to maintain its going concern status.

As a result, MI said Magna's ability to continue as a going concern is in substantial doubt.

"I believe that MEC has tremendous assets and potential upside," MI vice chairman and chief executive officer Dennis Mills said in the release.

"I am also encouraged by MEC's announcement earlier this week that it has engaged a financial adviser to help develop and execute a plan to sell, or enter into joint ventures with respect to, certain core assets and enhance MEC's capital structure.

"Although I have no doubt that it will be a challenge, I still believe there is an opportunity to turn things around at MEC."

Although Magna continues to take steps to implement at debt elimination plant, MI said Magna does not expect to be able to complete asset sales as quickly as originally planned or to see originally expected proceeds.

MI Developments said it is continuing to explore strategic transactions and alternatives in connection with its controlling equity investment in Magna Entertainment, including a recapitalization, restructuring or sales of some of all of Magna's assets.

MI is also evaluating to what extent it might participate in any of those transactions or alternatives, according to the release.

MI Developments is an Aurora, Ont.-based real estate operating company engaged in the ownership, development, management, leasing and acquisition of industrial and commercial real estate properties located in North America and Europe.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.