Golden Gate Fields for Sale as Magna Reorganizes

By Richard Brenneman
Thursday December 04, 2008 - 09:48:00 AM

Golden Gate Fields will be up for sale under terms of a corporate reorganization announced last week by corporate owner Magna Entertainment (stock symbol MECA). 

While the restructuring doesn’t necessarily mean the track will be sold, MECA agreed to put all its assets on the table as the first stage of restructuring. 

Golden Gate Fields executive Robert Hartman could not be reached for comment on the track’s future. 

Bay Meadows in San Mateo, the region’s other major horse racing venue, closed in August, resulting in an expansion of the racing season at the Albany track, with the remaining dates assigned to the Alameda County Fairgrounds in Pleasanton. 

Magna Entertainment lost $116.1 million between Jan. 1 and Sept. 30, and had been forced to seek costly short-term financing to stay afloat. Earlier this month the company announced the hiring of a law firm specializing in bankruptcy and reorganization. 

If all the proposed financial transactions announced Wednesday are carried out, company founder Frank Stronach, a Canadian car parts magnate, will wind up owning all the shares. 

Originally created as part of Magna International, Stro-nach’s parts firm, the race tracks and associated ventures were spun off into a separate firm, MI Developments (MID), with Magna Entertainment as a subsidiary. 

According to the company’s announcement Monday morning, once the proposed transactions are completed, “MECA will ultimately be controlled directly by the Stronach Group, MID will no longer have any ownership interest in MECA and MID will be prohibited from” further investments in the company with approval the MID minority shareholders. 

MID agreed to provide interim financing, and MECA agreed “to use commercially reasonable efforts to sell or enter into joint ventures in respect of its assets, including its core racetrack assets,” according to the corporate announcement. 

In addition to Golden Gate Fields, the company owns Santa Anita Park in Southern California, Laurel Park and Pimlico in Maryland, Portland Meadows in Oregon, Lone Star Park in Texas, Remington Park in Oklahoma, The Meadows in Pennsylvania, Gulfstream Park in Florida and the Magna Racino in Stronach’s native Austria. 

Other interests include an off-track betting system and major interests in a television distribution system, a horse racing network and AmTote International, which provides number-crunching services for tracks. 

Some of the interim financing would allow the Magna Entertainment to install video lottery terminals—a species of slot machine—at the company’s Laurel Park track in Maryland, the result of a statewide initiative held during the Nov. 4 election. 

Upon completion of the transfer, MECA would remain a horse racing company, stripped of its assets and wholly controlled by Stronach. 

The company estimated the total value of its assets last week at between $100 million and $120 million. MECA shares shot up after the announcement broke on Nov. 26, starting the day at $1.49 and closing at $2.02. Shares closed Wednesday (a week after the announcement) at $1.25. 

The car parts parent company had been reporting steady growth in income until caught by the impact of the current recession. Magna International announced Wednesday morning that it was closing two of its parts plants and laying off 850 workers