Sunday, September 6, 2009

Auction of Santa Anita, Lone Star Withdrawn

Auction of Santa Anita, Lone Star Withdrawn

An auction scheduled Sept. 8 on properties owned by bankrupt Magna Entertainment Corp. will not go forward after the company withdrew Santa Anita Park, Lone Star Park, and other assets from the bidding in court documents filed in U.S. bankruptcy court.

The action is an admission that MEC did not receive any offers on Santa Anita or Lone Star that were deemed sufficient as an opening, or "stalking horse" bid. It allows MEC to continue to entertain offers on those properties -- as well as Golden Gate Fields, its Maryland tracks, and Gulfstream Park -- and could also mean the corporation's parent company, MI Developments, may emerge as the stalking horse bidder in any future auction procedure.

MEC, which filed for bankruptcy March 5, owes $371 million to MI Developments, its largest creditor. The company planned to auction properties as a way to pay down that debt as part of its reorganization, but it is unclear how it will proceed with that plan.

Michael Wildish, a representative for Miller Buckfire & Co., the company MEC hired as an adviser and investment banker to market its properties, did not return a phone message Sept. 4 seeking comment.

In addition to Santa Anita and Lone Star, the other assets in the proposed auction package, approved by the bankruptcy court in May, were Portland Meadows in Oregon; MEC’s joint-venture commercial development project, The Shops at Santa Anita; its Fex Straw Manufacturing and StreuFex horse-bedding operations; and undeveloped land holdings in Dixon, Calif.

An attorney for MEC reported to a bankruptcy court judge Aug. 26 that another piece of property in the package, more than 490 acres of undeveloped land it owns in Ocala, Fla, brought an auction bid of more than $8 million. The company has also received a reported offer of $82.25 million for Remington Park in Oklahoma City from the Chickasaw Nation, an Indian tribe invested in several gambling properties in the state.

MEC also hopes to attract offers for Thistledown, a racetrack outside of Cleveland, Ohio, now that it has been approved for video lottery terminals if the authorization is upheld by the courts. There have been indications Thistledown is close to being sold.

The company paid $126 million for Santa Anita in 1998, and $99 million for Lone Star in 2000.

In its original motion for the auction package plan, MEC said it would also “continue to explore all alternatives with respect to the remaining assets,” which includes racetracks Golden Gate Fields, Gulfstream Park, Laurel Park, and Pimlico Race Course, among other holdings.

The revised plan was submitted in reaction to several earlier objections by creditors that included complaints about the involvement of founding company chairman Frank Stronach in the process. MI Developments, which Stronach also chairs, in April dropped a $195-million “stalking horse” bid for assets that included Golden Gate and Gulfstream, among others.

Stronach was replaced by reorganization specialist Gregory Rayburn as MEC's chief executive officer, and has recused himself from certain bankruptcy-related business, including sale transactions, the motion said.

MI Developments has said it would prevent “fire sales” of any MEC properties, including Santa Anita.