Magna Entertainment Corp. Proceeds with Stock Consolidation

    AURORA, ON, July 3 /CNW/ - Magna Entertainment Corp. ("MEC" or the
"Company") (NASDAQ:   MECA; TSX: MEC.A) today announced that its Board of
Directors has approved a reverse stock split of MEC's Class B Stock and Class
A Subordinate Voting Stock ("Class A Stock"), utilizing a 1:20 consolidation
ratio. Previously, at the May 6, 2008 Annual and Special Meeting of
Stockholders, the Company's stockholders authorized the Board of Directors to
effect the reverse stock split.
    MEC's Class A Stock will trade on the Nasdaq Global Market ("NASDAQ")
under the symbol "MECA.D" for twenty trading days following the effective time
of the reverse split, after which trading will resume under the current
symbol. MEC's Class A Stock will continue to trade on The Toronto Stock
Exchange under the trading symbol, "MEC.A". Subject to completing applicable
filings, it is currently expected that the reverse split will become effective
on or about July 22, 2008.
    As a result of the reverse stock split, every twenty shares of MEC Class
B Stock and Class A Stock will be consolidated into one share of MEC Class B
Stock and Class A Stock, respectively. The reverse stock split affects all
shares of common stock, stock options and convertible securities of MEC
outstanding prior to the effective time of the reverse stock split. The
approximately 58.4 million outstanding shares of Class B Stock and 58.1
million outstanding shares of Class A Stock will be reduced to approximately
2.92 million shares of Class B Stock and 2.91 million shares of Class A Stock,
    Registered stockholders of the Company will receive instructions by mail
on how to obtain a new share certificate representing their consolidated Class
B Stock and Class A Stock. No action will need to be taken by stockholders who
hold shares in "book entry" form. No fractional shares will be issued as a
result of the consolidation. If the consolidation results in a registered
shareholder having a fractional interest of less than a whole share, the
registered shareholder will receive a cash payment for the value of that
interest. The amount of the payment for fractional shares of Class B Stock
(each of which is convertible at any time into shares of Class A Stock on a
one for one basis) and Class A Stock will be equal to the product obtained by
multiplying (1) the average closing sales price of MEC's Class A Stock as
reported on NASDAQ for the four trading days preceding the effective date of
the reverse stock split times (2) the amount of the fractional share.
    The Board of Directors of the Company approved the reverse stock split to
allow the Company to regain compliance with the NASDAQ $1.00 minimum bid price
continued listing requirement. As previously announced, on February 12, 2008,
MEC received notice from NASDAQ advising that, in accordance with Nasdaq
Marketplace Rule 4450(e)(2), MEC had 180 calendar days, or until August 11,
2008, to regain compliance with the minimum bid price required for the
continued listing of MEC's publicly held Class A Stock on NASDAQ, as set forth
in Nasdaq Marketplace Rule 4450(a)(5). MEC received this notice because the
bid price of its publicly held Class A Stock closed below the $1.00 per share
minimum for 30 consecutive business days prior to February 12, 2008.

    MEC, North America's largest owner and operator of horse racetracks,
based on revenue, acquires, 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 anticipated completion of the reverse stock split, the anticipated
compliance with NASDAQ minimum bid listing requirement 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 our
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 our 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 our forward-looking statements include, but may not be limited
to, 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; our
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 our non-racetrack operations, such
as broadcasting ventures; and our ability to develop, execute or finance our
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 be able to successfully implement our debt
elimination plan and 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 our senior secured revolving credit facility
with a Canadian chartered bank and our bridge loan facility with a subsidiary
of MI Developments Inc., MEC's controlling stockholder), and there will not be
any material adverse changes in: general economic conditions; the popularity
of horse racing and other gaming activities; weather and other environmental
conditions at our facilities; the regulatory environment; and 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.

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

Organization Profile


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