Magna Entertainment Corp. announces MI Developments is not proceeding with previously announced reorganization proposal



    AURORA, ON, Feb. 18 /CNW/ - Magna Entertainment Corp. ("MEC" or "the
Company") (NASDAQ:   MECA; TSX: MEC.A) was today informed by MI Developments
Inc. ("MID"), MEC's controlling shareholder, that MID will not be proceeding
with its reorganization proposal. MEC is in discussions with MID concerning
alternatives to the reorganization proposal. MEC cautions shareholders and
others considering trading in securities of MEC that there can be no assurance
that any alternative transaction will be completed.

    In accordance with the terms of certain of MEC's loan agreements, the
maturity date of the first tranche of the new loan that a subsidiary of MID
("MID Lender") made available to MEC on December 1, 2008 in connection with
the reorganization proposal (the "New Loan"), the maturity date of the bridge
loan from MID Lender and the deadline for repayment of US$100 million under
the Gulfstream project financing facility from MID Lender will each be
accelerated, respectively, to March 20, 2009. The maturity date of the second
tranche of the New Loan has already been accelerated to May 13, 2009. As of
February 18, 2009, there is approximately US$48.5 million outstanding under
the first tranche of the New Loan, approximately US$0.7 million outstanding
under the second tranche of the New Loan and approximately US$126.2 million
outstanding under the bridge loan. In accordance with its terms, the maturity
date of MEC's US$40 million credit facility with a Canadian chartered bank
will also accelerate to March 5, 2009. If MEC is unable to repay its
obligations when due or satisfy required covenants in its loan agreements,
substantially all of its other current and long-term debt will also become due
on demand as a result of cross-default provisions within loan agreements,
unless MEC is able to obtain waivers, modifications or extensions. In the
event MEC is unsuccessful in its efforts to raise additional funds, through an
alternative transaction with MID, assets sales, by taking on additional debt
or by some other means, MEC will not be able to meet such obligations.

    ABOUT MEC

    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 AmTote International, Inc., a
provider of totalisator services to the pari-mutuel industry, XpressBet(R), a
national Internet and telephone account wagering system, as well as
MagnaBet(TM) internationally. Pursuant to joint ventures, MEC has a fifty
percent interest in HorseRacing TV(R), a 24-hour horse racing television
network, and TrackNet Media Group LLC, a content management company formed for
distribution of the full breadth of MEC's horse racing content.

    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 (Ontario) (collectively referred to as forward-looking
statements). These forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995 and
the Securities Act (Ontario) and include, among others, statements regarding
MEC's liquidity, discussions with MID and other matters that are not
historical facts.

    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 risk that the Company and MID fail to
successfully agree upon any alternative transaction to the reorganization
proposal previously announced on November 26, 2008, the inability of the
Company to obtain additional financing and funds from one or more possible
sources, which may include MID, in order to fund its operations, implement its
strategic plan and capitalize on future growth opportunities, 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, that we will continue with our
efforts to implement our September 2007 adopted plan to eliminate the
Company's debt, although not on the originally contemplated time schedule,
negotiate and close, on acceptable terms, one or more core asset sale
transactions, comply with the terms of and/or obtain waivers or other
concessions from our lenders and refinance or repay on maturity our existing
financing arrangements (including a senior secured revolving credit facility
with a Canadian chartered bank, the new loan that a subsidiary of MID ("MID
Lender") made available to MEC on December 1, 2008 and the bridge loan from
MID Lender, possibly obtain additional financing on acceptable terms to fund
our ongoing operations and there will not be any material further
deterioration in general economic conditions or any further significant
decline in the popularity of horse racing and other gaming activities beyond
that which has already occurred in the current economic downturn; nor any
material adverse changes in weather and other environmental conditions at our
facilities, the regulatory environment or our ability to develop, execute or
finance our strategies and plans as anticipated.

    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.

    

SOURCE: Magna Entertainment Corp. %SEDAR: 00013424E

For further information:

For further information: Blake Tohana, Executive Vice-President and
Chief Financial Officer, Magna Entertainment Corp., 337 Magna Drive, Aurora,
ON, L4G 7K1, Tel: (905) 726-7493, www.magnaent.com

Organization Profile

MAGNA ENTERTAINMENT CORP.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890