Magna Entertainment plan confirmed; bankruptcy exit expected Friday

By Caroline Salls

Pittsburgh, April 26 - Magna Entertainment Corp.'s plan of reorganization has been confirmed by the U.S. Bankruptcy Court for the District of Delaware, according to an MI Developments Inc. news release.

The plan is expected to take effect on Friday, subject to the receipt of regulatory approvals and other conditions.

"We are thankful that the bankruptcy process is drawing to a close and we have recovered value for our loans," MI Developments vice chairman and chief executive officer Dennis Mills said in the release.

"As we proceed to take ownership of the acquired assets, we look forward to implementing individual plans for each asset to improve and maximize their economic values."

Under the plan, in exchange for the dismissal of a lawsuit filed by the company's official committee of unsecured creditors and releases of MI Developments, its affiliates and all current and former officers and directors of MI Developments and Magna, Magna's unsecured creditors will receive $89 million in cash plus $1.5 million as a reimbursement for expenses.

In addition, some of Magna's assets will be transferred to MI Developments, including Santa Anita Park, Golden Gate Fields, Gulfstream Park, The Maryland Jockey Club, AmTote International, Inc. and XpressBet, Inc.

Treatment of creditors will include:

• Holders of administrative claims, priority tax claims and priority non-tax claims will be paid in full in cash;

• MI Developments will receive sale proceeds, non-debtor assets, reorganized debtor stock and reorganized debtor assets;

• Holders of Wells Fargo claims, BMO claims and PNC claims will be paid in full in cash;

• Holders of secured claims will be paid either in cash, with the proceeds of the sale of the property securing the claim or through the return of that property;

• Holders of 8.55% note claims, 7¼% note claims and non-Maryland Jockey Club general unsecured claims will receive a share of creditor cash and, if an operating trust is established, trust interests;

• Holders of Maryland Jockey Club claims will be paid in full in cash; and

• Holders of existing equity interests will receive no distribution.

Magna, an Aurora, Ont.-based owner and operator of horse racetracks, filed for bankruptcy on March 5, 2009. Its Chapter 11 case number is 09-10720.

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