MONTREAL, Oct. 14 /CNW Telbec/ - The recent unilateral action by the Government of Quebec rendering Attractions Hippiques' proposed restructuring plan unviable leaves it with no other alternative but to cease to operate pari-mutual activities at its Hippo Clubs and at the Hippodrome de Montréal, the Hippodrome de Trois-Rivières and all horseracing activities at the Quebec City racetrack and the video lottery terminals (VLTs) on its premises.
The Quebec government's decision to cease its past practice of refunding the taxes on pari-mutual wagering and not modifying in a timely manner its regulations in respect of wagering zones makes any restructuring plan unviable. Attractions Hippiques intends to proceed with an orderly sale of its assets and use the proceeds to pay the company's creditors with a view to filing a proposal under the Bankruptcy & Insolvency Act. The assets of Attractions Hippiques will be sold under the supervision of a court appointed trustee.
As part of its proposal to creditors Attractions Hippiques is studying the possibility of filing legal proceedings against the Government of Québec for the significant monetary damages suffered by itself, its creditors and shareholders all of whom have suffered losses. These losses are attributable in part due to the non fulfillment of the legitimate expectations of the parties that the government of Quebec would act so as to maximize revenues from the Ludoplex operations and that it would not systematically obstruct the ability of Attractions Hippiques in its search to relocate the Montreal hippodrome.
As a result of the above Attractions Hippiques has been deprived of 34.1 million in annual revenues from 1,300 VLTs that were to be operated by Loto-Québec in this new location. Its financial capacity was also seriously compromised by Loto-Québec's poor performance in the operation of the VLTs located in its Trois-Rivières and Quebec City Ludoplexes.
Based on the Government statements of prior performance Attractions Hippiques had projected net revenues of $49.9 million from VLTs at the gaming complexes built and operated by Loto-Québec for the year 2008. In fact, only $7.6 million was generated, creating an annual shortfall of $42.3 million.
The Government of Quebec and its agency Loto-Québec did nothing to improve or correct the situation. Consequently, on June 28, 2008, Attractions Hippiques was forced to place itself under the protection of the Companies' Creditors Arrangement Act in order to restructure its operations.
While it was subject to court protection Attractions Hippiques made numerous efforts to save the industry. In February 2009, the horsemen's associations rejected the Attractions Hippiques` proposal to support the industry
On September 30, Attractions Hippiques provided a new restructuring plan to its creditors to ensure the continued existence of the company and of the industry. The plan was formulated after lengthy detailed negotiations with and in cooperation with the representatives of the Government of Quebec. On October 2, Attractions Hippiques learned that the government of Quebec would not support the industry in any manner, would not refund pari-mutual taxes, and had not made any changes to its regulations in order to carry on pari mutual wagering in Quebec from one zone.
This decision has rendered Attractions Hippiques` proposed restructuring plan unviable.
SOURCE ATTRACTIONS HIPPIQUES
For further information: For further information: Robert Lupien, (514) 845-2257, ext. 233