MAGNA Entertainment Corp worth peanuts

[Playwithfire]

I just noticed Magna Entertainment, which owns Santa Anita, Gulfstream Park, Golden Gate Fields among its racetrack portfolio, was pretty much resigned to do a 25 to 1 reverse split on their stock just to get it back to near $2/share (Reverse split meaning reducing shares from market to hike price, often to get price above $1 and avoid delisting by Nasdaq).

The total value of the company is only $9.4 million. That's less than the first incarnation of Cushion track they installed at Santa Anita. The stock is down 96% in the past year.

Of course its justified given they lost over $100 million last year and have a negative operating cash flow over 10% of revenues. How poorly do they run that business. Churchill Downs Inc. is profitable, and have a very similar business.

What a disaster.

[Joltman]

So true

They lost money hand over fist while the economy was strong. What happens if/when it really tanks in Q4?

All reading this who are in the business might seriously ask that question because unless someone real rides in and bails Magna out and runs it well many Magna tracks will be shuttered.

jm

[majxmom]

I have a feeling that Stronach will be forced to sell Santa Anita, and what a good thing! With the credit crunch, he won't be able to add any more debt. He'll have to sell a major asset or see the whole thing tumble.

How wise the main Magna directors were to stand up to Stronach and force him to separate out MEC. They are looking like geniuses right now.

[Hold Your Peace]

Actually the market cap of Magna Entertainment at the close of business today was only $4.71 million.

But absolutely no one would buy Magna Entertainment as their balance sheet stinks (tons of debt) and their earnings outlook is beyond bleak.

A liquidation of Magna is the only way to go but even that can get complicated as there are liens on some of their properties.

One in particular of note is a lien on Santa Anita securing a $40 million loan due October 15th to a subsidiary of the Bank Of Montreal.

Some of Magna's properties are worth very little.

If slots don't pass in Maryland in November I wouldn't give a nickel for Pimlico.

Hopefully someone could try to make a go of it with Laurel though to keep racing from completely dying out in Maryland. It wouldn't be easy though. And for that reason you'd need to acquire it cheap.

[TrueColours]

hmmm ... wonder how this will affect Streufex (the straw bedding company in NC) as that company is owned by MEC as well ...

And one of the largest revenue bases for Streufex was at the Magna owned tracks, but if Magna doesnt own any tracks any more, a huge percentage of their buyer base is now gone

Magna Corp relied on the Big 3 auto makers to drive their automotive parts / supply companies. With those industries in shambles as well, I wonder how the main Magna companies will fare as well?

[TrueColours]

So - what does this mean in "real terms" for those "in the know?"

I assume that Magna Corp cant bail them out as they have done in the past so they have to sink or swim based on their own merits and their own bottom line. Do they have any chance at all of staying afloat or once Oct 15th hits and that $40M loan is due, is that the end for them?

[Laurierace]

hmmm ... wonder how this will affect Streufex (the straw bedding company in NC) as that company is owned by MEC as well ...

And one of the largest revenue bases for Streufex was at the Magna owned tracks, but if Magna doesnt own any tracks any more, a huge percentage of their buyer base is now gone

Magna Corp relied on the Big 3 auto makers to drive their automotive parts / supply companies. With those industries in shambles as well, I wonder how the main Magna companies will fare as well?

I wasn't aware that Magna owner Streufex, but I know about 5 years ago they put that crap in the receiving barn at Laurel and were going to mandate that everyone use it in their stalls as well. The dust was so bad and the stalls looked so horrible that everyone refused and they had to stop using it in the receiving barn as well. That is plain and simple a bad product.

[KBEquine]

Some of Magna's properties are worth very little.

If slots don't pass in Maryland in November I wouldn't give a nickel for Pimlico.

Hopefully someone could try to make a go of it with Laurel though to keep racing from completely dying out in Maryland. It wouldn't be easy though. And for that reason you'd need to acquire it cheap.

Perhaps Halsey Minor will step in . . . perhaps when everything shakes out, really good things will finally happen for Maryland racing. [A girl can dream, right?]

[TrueColours]

I wasn't aware that Magna owner Streufex

Magna Entertainment did - not Magna Corp ...

So - if MECA is on shaky territory come the middle of the month, one would assume that Fex Manufacturing (Streufex's company) would also be affected ...

[Barbaro06]

We hope so KB!!!

[tbrace]

The dangerous thing for California race fans is that both of Magna's big CA tracks, Santa Anita and Golden Gate, are worth much more as commercial/residential developments than they are racetracks.

If Magna bails out, we could loose both tracks to malls/condos.

Can you imagine NorCal without Bay Meadows (already closed) and Golden Gate?

Southern CA without Santa Anita or Hollywood (already announced their days are numbered) is a nightmare.

Good-bye CA racing, if that happens. We can't all race at DelMar and the fair circuit.

[spex4me]

Um no we want Halsey to reinvent VA racing..... MD can go dormant for a few years (insert evil laugh here!!) Actually if he is as shrewd a business man as he seems, he'll let Magna crap out then create his own little empire in the mid atlantic gaming scene. I just went to Charlestown the other night (because I am a glutton for punishment) and I don't think anyone in there gave a rat's patooty about the economy. I was hoping for less crowd but it seemed the same as always.

[TrueColours]

So - October 15th came and went ...

Does anyone know what happened with Magna / Santa Anita / the BMO $40M loan payment???

Enquiring minds want to know ...

[Hold Your Peace]

So - October 15th came and went ...

Does anyone know what happened with Magna / Santa Anita / the BMO $40M loan payment???

Enquiring minds want to know ...

They got an extension AGAIN.

There's a lot going on right now though and it seems like the MEC house of cards is sure to fall by year end.

There's an article at Blood Horse about not only Halsy Minor wanting to buy the loans MI Developments has made to MEC but also a large shareholder in MI Developments asking questions about why MI Developments continues to pour money into the MEC sinkhole.

If Magna loses the slots vote in Maryland in November that may be the straw that breaks the camels back.

[zinn21]

Played golf yesterday with a few GGF management guys and they have heard nothing regarding the sale of GGF. They tell me GGF is very profitable as a racing entity.