Sept 14, 2007
Stumbling horse-racing operator Magna Entertainment Corp.
is planning to eliminate its debt by the end of next year with
the help of another bridge loan from MI Developments
Inc. and an injection of cash from founder Frank Stronach.
Magna Entertainment said yesterday it intends to generate
between $600 million (U.S.) and $700 million in a sweeping sale
of racetracks and real estate, aiming to be out of debt by Dec.
31, 2008.
Stronach said he was fully committed to the plan, and was
"cracking the whip" to get rid of debt and improve
profitability.
"I've been frustrated in the past that we have not moved
faster to cut our debt and sell assets that are not core to
MEC's future," he said during a call with analysts.
"I'm determined that our plan will be successfully and fully
implemented on a timely basis so that MEC can achieve its
strategic potential without the burden of debt and interest
expense that it has been carrying for the last number of years."
Stronach's previous declarations have included a May 2006
pledge to have Magna Entertainment out of debt by early 2007.
Magna Entertainment shares closed up 45 cents (Canadian), or
24 per cent, to $2.35 on the Toronto Stock Exchange, with a
52-week high of $6.30 and low of $1.75. MI Developments was off
30 cents at $32.45.
Under the plan, MI Developments, the property-management
spin-off of Stronach's Magna International Inc. auto-parts
empire, will provide a short-term cash loan of up to $80
million (U.S.).
This money, along with a $20 million purchase of Magna
Entertainment stock by a Stronach estate-planning vehicle, "will
provide immediate funding to support the debt elimination plan,"
the companies said.
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