Source AP ©

Magna tries to settle debt

Magna Entertainment Corp. will sell off some assets in an attempt to get rid of its debt.

The racetrack owner and operator was carrying a US$550-million (395.77 million EUR) debt load as of mid-August.

Magna said it is looking for proceeds between approximately US$600 million (431.75 million EUR) and US$700 million (503.71 million EUR) from the sale of racetracks and real estate, aiming to be out of debt by the end of next year.

The company plans to sell racetracks in Michigan, Ohio and Oregon, along with real estate in locations including Florida, California, New York, Maryland and Austria.

The company said it worked out US$100 million (71.96 million EUR) in funding, including an US$80-million (57.57-million EUR) short-term loan from MI Developments, the property-management spinoff of Stronach's Magna International Inc. auto-parts empire. The loan, along with a US$20-million (14.39-million EUR) purchase of Magna Entertainment stock by a Stronach estate-planning vehicle, "will provide immediate funding to support the debt elimination plan," the companies said in a statement.

The new loan from MI Developments, which owns 58 percent of Magna Entertainment and in turn is controlled by Stronach, comes just over a month after MID chief executive John Simonetti indicated MID would like to extract itself from the relationship.

"This is light at end of a long tunnel of a tumultuous year," said senior analyst Stephen A. Velgot with Cathay Financial.

Magna Entertainment was spun off from Magna International in 2000. Magna International has grown to US$24 billion (17.27 billion EUR) in sales last year in 23 countries and a current market capitalization of US$8.9 billion (6.4 billion EUR).

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