Magna Entertainment Corp. makes announcement on initial license fee for Video Lottery Operation License in Anne Arundel County



    AURORA, ON, Feb. 4 /CNW/ - Magna Entertainment Corp. ("MEC" or "the
Company") (NASDAQ:   MECA; TSX: MEC.A) announced that it has arranged for the
funding of the specified license fee of $28.5 million (the "Initial License
Fee") to the account of MEC's subsidiary, Laurel Racing Assoc., Inc. ("Laurel
Racing"), in connection with the February 2, 2009 application by Laurel Racing
for a Video Lottery Operation License ("VLT License") in Anne Arundel County.
The Initial License Fee will be placed in an escrow account held at a Maryland
bank. Laurel Racing has asked the Maryland VLT Facility Location Commission
(the "Commission") to undertake that it will utilize its discretionary
authority to refund the Initial License Fee in the event Laurel Racing is
granted a VLT License but is unable to obtain all proper zoning and permits
necessary for the operation of a video lottery terminal facility ("VLT
Facility") at Laurel Racing's Anne Arundel location. Provided the Commission
agrees to refund the Initial License Fee, such fee (and all interest earned)
will be paid to the Commission. The Initial License Fee funds were advanced
pursuant to the previously-announced December 1, 2008 loan agreement among
MEC, certain MEC subsidiaries as guarantors, and a subsidiary of MEC's
controlling shareholder, MI Developments Inc. ("MID"), as lender.

    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
the Initial License Fee 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 one or more of
reorganization transactions contemplated by the November 26, 2008 transaction
agreement (the "Transaction Agreement") between MEC and certain entities
affiliated with MEC's Chairman and Chief Executive Officer, Frank Stronach,
may, for various reasons, not proceed, the terms of any reorganization
transaction may differ from those currently contemplated by the Transaction
Agreement, the MID shareholders failing to approve the reorganization
proposal, an inability to obtain regulatory approval from securities and other
regulators in connection with proposed reorganization matters that are
intended to result in the issuance, registration and listing of shares of the
Company's capital stock, the possible termination of the Transaction Agreement
for any reason, the acceleration of the maturity dates and repayment deadlines
under the new loan ("New Loan") provided for in the December 2008 loan
agreement between MEC as borrower, certain subsidiaries of MEC as guarantors
and a wholly-owned subsidiary of MID (the "MID Lender") as lender, a bridge
loan (the "Bridge Loan") with the MID Lender and two project financing
facilities with the MID Lender, a failure by the Company to fully retire its
subordinated notes by December 14, 2009 as contemplated by the Transaction
Agreement, a failure by the Company to negotiate and close, on acceptable
terms, asset sale transactions (including potential core asset sales), 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 and the Bridge Loan), 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.

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.

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