|Magna Entertainment Corp. announces filing for Chapter 11 bankruptcy protection|
MEC's day-to-day operations will continue uninterrupted throughout the Chapter 11 process while it undertakes to sell its assets and implement a reorganization of the Company. As part of the Chapter 11 filing, the Company has sought emergency relief to ensure the continued payment of employee wages and benefits and horsemen winnings and its ability to honor existing customer programs. XpressBet(R), MEC's account wagering company, is not one of the MEC subsidiaries making a Chapter 11 filing.
In connection with the Chapter 11 filing, MEC announced that it has
arranged a six-month secured debtor-in-possession financing facility (the "DIP
Financing") in the amount of
The terms of the DIP Financing were considered by the Special Committee of MEC's board of directors and the Special Committee retained independent legal and financial advisors to assist in its deliberations. The DIP Financing was approved by MEC's board, following a favourable recommendation of the Special Committee.
MEC also announced that it has entered into an agreement with MID to sell
its interests associated with the following assets (the "Stalking Horse Bid"):
The terms of the Stalking Horse Bid were reviewed and recommended by the independent directors of MEC and approved by the board of directors of MEC.
All of MEC's businesses, including racetracks, casinos, XpressBet(R), and
its tote services company,
After extensively exploring alternatives following thorough consultation with its legal and financial advisors, MEC's board of directors determined that an orderly sale of the Company's assets through a Chapter 11 process is the most prudent and effective way to maximize value for MEC's stakeholders.
MEC also announced that one of its subsidiaries in
MEC will file a material change report as soon as practicable after
issuing this press release. The material change report will be filed less than
21 days before the closing of the DIP Credit Agreement. The timing of the
material change report is, in MEC's view, both necessary and reasonable
because the terms were approved by MEC's board of directors on
MEC, North America's largest owner and operator of horse racetracks, based
on revenue, develops, owns and operates horse racetracks and related
pari-mutuel wagering operations, including off-track betting facilities. MEC
also develops, owns and operates casinos in conjunction with its racetracks
where permitted by law. MEC owns and operates
This press release contains "forward-looking statements" within the
meaning of applicable securities legislation, including Section 27A of the
United States Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the United States Securities Exchange Act of 1934, as amended
(the "Exchange Act") and forward-looking information as defined in the
Securities Act (
Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or the times at or by which such performance or results will be achieved. Undue reliance should not be placed on such statements. Forward-looking statements are based on information available at the time and/or management's good faith assumptions and analyses made in light of the Company's perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances and are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond the Company's control, that could cause actual events or results to differ materially from such forward-looking statements. Important factors that could cause actual results to differ materially from the Company's forward-looking statements include, but may not be limited to, the Company's ability to obtain court approval with respect to its motions in the Chapter 11 proceedings; the ability of the Company and its subsidiaries to prosecute, develop and consummate a plan of reorganization with respect to the Chapter 11 proceedings; risks associated with third party motions in the Chapter 11 proceedings, which may interfere with the Company's ability to develop and consummate a plan of reorganization; the potential adverse effects of the Chapter 11 proceedings on the Company's liquidity or results of operations; and material adverse changes in: general economic conditions; the popularity of racing and other gaming activities as recreational activities; the regulatory environment affecting the horse racing and gaming industries; the Company's ability to obtain or maintain government and other regulatory approvals necessary or desirable to proceed with proposed real estate developments; increased regulation affecting certain of the Company's non-racetrack operations, such as broadcasting ventures; and the Company's ability to develop, execute or finance the Company's strategies and plans within expected timelines or budgets. In drawing conclusions set out in our forward-looking statements above, we have assumed, among other things: the ability of the Company to obtain court approval with respect to its motions in the Chapter 11 proceedings; the ability of the Company and its subsidiaries to prosecute, develop and consummate a plan of reorganization with respect to the Chapter 11 proceedings; that the Company will be able to manage the risks associated with third party motions in the Chapter 11 proceedings and they will not interfere with the Company's ability to develop and consummate a plan of reorganization; the Company will be able to adequately manage any potential adverse effects of the Chapter 11 proceedings on MEC's liquidity or results of operations.
Forward-looking statements speak only as of the date the statements were made. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking statements. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect thereto or with respect to other forward-looking statements.