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April 20th, 2009 by Temple City Tribune
The voluntary bankruptcy petition filed by Magna Entertainment Corp (MEC) is due to see some action today as the company seeks approval from Delaware bankruptcy judge Mary F. Walrath to auction off several of its racetracks. Santa Anita racetrack is one of the properties MEC has said it would divest.
The action is expected to draw criticism from banks which hold liens on the racing facilities. Magna announced from the beginning that it would attempt to hold a “stalking horse” auction, in which the first bidder would take the property. A shareholder, MI Developments has entered a bid of $195 million for several properties.
Frank Stronach announced that Santa Anita and other properties would be auctioned off upon entering the bankruptcy petition in March of this year. Critics of the proposal say that it is a give-away price to a company controlled by Stronach. Stronach stepped down as CEO of Magna last week, but retains the position of chairman in both Magna and MI Developments.
Santa Anita’s debt is held by Wells Fargo with the L A Turf Club, a subsidiary of Santa Anita Co., as guarantor. The loan is secured by track property and stock of Santa Anita Co. and L A Turf Club. Santa Anita has borrowed $67.5 million and has a revolving loan of up to $7.5 million under the terms of the loan. When the bankruptcy filing was made, the loan was in violation of its agreements. The loan matures in 2012. A second mortgage on the property is held by the Bank of Montreal secured by the same guarantors.
Although other uses of the property are envisioned through Magna’s arrangement with Caruso Affiliates in their quest to develop 51 acres plus room for 4,000 parking spaces at the southwest corner of the track property as The Shops At Santa Anita, the City of Arcadia has long held the position that track property can only be used for racing. It believes that a new owner will turn up and that track activities will continue as usual.
By Bill Peters