class=t>Magna Entertainment Corp. announces results for the third quarter ended September 30, 2006 class=tt>Thursday November 2, 6:17 am ET class=ar>AURORA, ON, Nov. 2 /CNW/ - Magna Entertainment Corp.
("MEC") (NASDAQ: - ; TSX: - ) today reported its financial results for the third quarter 30, 2006 include the Magna Golf Club, the sale of which was completed on August 25, 2006 and the operations of a restaurant and related real estate in the United States, the sale of which was completed on May 26, 2006. Results for the three and nine months ended September 30, 2005 have been reclassified to reflect only continuing operations, reporting the Magna Golf Club and the operations of the above, Flamboro Downs, the sale of which was completed on October 19, 2005, and Maryland-Virginia Racing Circuit, Inc., the sale of which was completed on September 30, 2005, as discontinued operations.
In announcing these results, Frank Stronach, Chairman and Interim Chief Executive Officer of MEC, remarked: "Our investments in AmTote International Inc. and Remington Park's casino facility contributed to a 44% increase in revenues from continuing operations this quarter. Given the seasonality of our business, the third quarter has traditionally been our least profitable continuing operations by $5.
6 million this quarter. However, we remain burdened with too much debt and interest expense, which contributed to an 2005. While we made some progress on debt reduction in the third quarter with the sale of Magna Golf Club, we remain focused on reducing debt further.
We $175.0 million note from the sale of The Meadows, which is expected to occur by November 14, 2006." owns and operates the Fontana Golf Club located in Oberwaltersdorf, Austria to a subsidiary of Magna International Inc.
for a sale value of euro 30.0 million (U.S.
$38.3 million). MEC will receive cash proceeds of approximately euro 13.
2 million (U.S. $16.
9 million) and approximately euro 16.8 million (U.S.
$21.4 million) of debt has been assumed by the purchaser. In addition, a subsidiary of MI Developments Inc.
will receive from MEC a fee of 1% of the bridge loan agreement between MEC and a subsidiary of MI Developments Inc., made as of July 22, 2005, as amended. The sale was supervised by the Special Committee of MEC's board of directors, consisting of Jerry D.
Campbell (Chairman), Louis E. Lataif and William J. Menear.
The transaction was Our racetracks operate for prescribed periods each year. As a result, our Our financial results for the three and nine months ended September 30, related pari-mutuel wagering operations. Discontinued operations for the three and nine months ended September 30, 2006 include the Magna Golf Club, the sale of which was completed on August 25, 2006 and the operations of a restaurant and related real estate in the United States, the sale of which was completed on May 26, 2006.
Discontinued operations for the three and nine months ended September 30, 2005 include the Magna Golf Club and the operations of the restaurant and related real estate in the United States as noted above, as well as Flamboro Downs, the sale of which was completed on October 19, 2005, and Maryland-Virginia Racing Circuit, Inc., the sale of which was completed on Revenues were $113.7 million in the three months ended September 30, 2006, compared to $78.
8 million in the three months ended September 30, 2005, - Southern U.S. operations revenues above the prior year period by casino facility, which opened in November 2005; Fields, whereby there were 29 live race days in the three months ended September 30, 2006 compared to no live race days in the three AmTote International Inc.
in July 2006, the operations of which are Maryland Turf Caterers, the food and beverage operations at Laurel Park and Pimlico, which was acquired in September 2005. These operations are now being consolidated into the Maryland operations, - Northern U.S.
operations below the prior year period by $1.6 million Revenues were $573.5 million in the nine months ended September 30, 2006, months ended September 30, 2005.
The increased revenues in the nine months ended September 30, 2006 compared to the prior year comparative period are September 30, 2006, but also includes increased attendance, handle and effective marketing efforts, increased revenues in our Florida operations due EBITDA loss of $21.1 million in the three months ended September 30, 2006 improved $5.6 million or 21.
0% over the three months ended September 30, 2005 - Southern U.S. operations above the prior year period by $3.
4 million November 2005, which contributed $3.7 million in EBITDA this quarter; - Northern U.S.
operations below the prior year period by $1.7 million - Predevelopment, pre-opening and other costs above the prior year amendment with respect to gaming, which will be submitted to the EBITDA of $5.4 million for the nine months ended September 30, 2006 months ended September 30, 2005.
The improvement in EBITDA is primarily a attendance, handle and wagering revenue and in our Florida operations with the predevelopment, pre-opening and other costs due to timing of activities increased professional fees, stock-based compensation expense and bank charges September 30, 2006 was $48.2 million, compared to a net loss of $43.4 million in the three months ended September 30, 2005.
The increased net loss is due to financings and bridge loan facility with a subsidiary of our parent company, MI Developments Inc., and increased depreciation expense primarily as a result November 2005. Net loss from continuing operations in the nine months ended September 30, 2006 of $74.
0 million increased from a net loss of $66.2 million in the nine months ended September 30, 2005 as EBITDA improvements in the In the three months ended September 30, 2006, cash used in operations before changes in non-cash working capital was $30.2 million, compared to $30.
7 million in the three months ended September 30, 2005, primarily due to the increased net loss in the current year period, partially offset by an increase in items not involving current cash flows. Total cash used in investing activities during the three months ended September 30, 2006 was $20.7 million, which included real estate property and fixed asset additions Inc.
, partially offset by $1.5 million of proceeds received on the disposal of real estate properties, fixed and other assets. Total cash provided from financing activities in the three months ended September 30, 2006 was $27.
2 million, which included $18.1 million of cash proceeds on increased bank indebtedness, $6.9 million from the issuance of long-term debt and $6.
3 million received from long-term debt with our parent, partially offset by Thursday, November 2, 2006 at 10:00 a.m. Eastern Standard time.
The number to use for this call is 1-877-871-4098. Please call 10 minutes prior to the start of the conference call. The dial-in number for overseas callers is 416-620-8834.
Blake Tohana, Executive Vice-President and Chief Financial Officer of MEC, will chair the conference call. We will also be webcasting the teleconferencing questions, please call Karen Richardson at 905-726-7465. MEC, North America's number one owner and operator of horse racetracks, based on revenues, acquires, develops, and operates horse racetracks and related casino and pari-mutuel wagering operations, including off-track betting facilities.
Additionally, MEC owns and operates XpressBet(R), a national Internet and telephone account wagering system, and Horse Racing meaning of applicable securities legislation, including the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. These forward-looking statements may include, among others, statements regarding: expectations as to operational improvements; expectations as to cost savings, revenue growth and earnings; the time by which certain redevelopment projects, developments, products and services; expectations as to the timing and receipt and regulations; expectations that claims, lawsuits, environmental costs, commitments, contingent liabilities, labor negotiations or agreements, or financial position, operating results, prospects or liquidity; projections, predictions, expectations, estimates, beliefs or forecasts as to our financial performance or results, and will not necessarily be accurate indications of achieved. Undue reliance should not be placed on such statements.
perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances and are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond the Company's control, forward-looking statements. Factors that could cause actual results to differ materially from our forward-looking statements include, but may not be limited to, material adverse changes: in general economic conditions, the popularity of racing and other gaming activities as recreational activities, the regulatory environment affecting the horse racing and gaming industries, and our ability to develop, execute or finance our strategies and plans within expected timelines or budgets. In drawing conclusions set out in our forward-looking statements above, we have assumed, among other things, that conditions, the popularity of horse racing and other gaming activities, the regulatory environment, and our ability to develop, execute or finance our made.
We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates and fixed assets 653 772 3,478 4,403 sold to a related party - - 5,578 1,400 (20,716) (35,752) (69,316) (77,425) the period (4,837) (9,248) (19,928) (24,407) beginning of period 35,791 44,846 50,882 60,005 Cash and cash equivalents, end of period $ 30,954 $ 35,598 $ 30,954 $ 35,598 Cash and cash equivalents $ 30,954 $ 50,882 Prepaid expenses and other 19,950 7,021 Assets held for sale 79,538 79,312 Accrued salaries and wages 7,769 8,160 Long-term debt due within one year 73,517 34,262 Due to parent 100,638 72,060 Liabilities related to assets held for sale 28,772 27,737 (Issued: 2006 and 2005 - 58,466) 394,094 394,094 Contributed surplus 20,826 17,943 Other paid-in-capital 1,196 - (all amounts in U.S.
dollars unless otherwise noted and all tabular amounts in thousands, except per share figures) 1. Summary of Significant Accounting Policies basis, which contemplates the realization of assets and the discharge future. The Company has a working capital deficiency of $170.
3 million as at September 30, 2006. Accordingly, the Company's sustain the operations of the business, renew or extend current secured and unsecured creditors, none of which is assured. On November 9, 2005, the Company announced that it had entered into a share purchase agreement with PA Meadows, LLC and a fund managed by which the Company owned and operated The Meadows, a standardbred racetrack in Pennsylvania.
The share purchase agreement was amended on July 26, 2006 (refer to Note 4(b)) to reflect the issuance of two Note"). On September 27, 2006, the Pennsylvania Gaming Control Board ("PGCB") granted approval to Washington Trotting Association, Inc. of First Note is expected to be repaid by November 14, 2006.
Funds bridge loan with the Company's parent, MI Developments Inc. ("MID"), which matures on December 5, 2006 and will also be used to repay, in part, the Company's senior secured credit facility, which currently matures on November 6, 2006, unless further extended with the consent BE K, Inc. construction loan.
The Company is also continuing to announced Recapitalization Plan, which may include further asset sales, partnerships and raising capital through equity offerings. However, the successful realization of these efforts is not determinable at this time. These financial statements do not give be unable to continue as a going concern and, therefore, be required accounting principles ("U.
S. GAAP") for interim financial information Accordingly, they do not include all of the information and footnotes required by U.S.
GAAP for complete financial statements. The with U.S.
GAAP requires management to make estimates and assumptions statements and accompanying notes. Actual results could differ from estimates. In the opinion of management, all adjustments, which consist of normal and recurring adjustments, necessary for fair presentation have been included.
For further information, refer to The Company's racing business is seasonal in nature. The Company's in the second half of the year, with the third quarter generating the largest operating loss. This seasonality has resulted in large Under Staff Accounting Bulletin 74, the Company is required to disclose certain information related to new accounting standards, In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No.
48, "Accounting for Uncertainty in statements in accordance with FASB Statement No. 109, "Accounting for return. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006.
The Company is currently reviewing FIN 48, but has not yet determined the impact on the Company's In September 2006, the FASB issued Statement of Financial Accounting SFAS 157 defines fair value, establishes a framework for measuring principles, and expands disclosures about fair value measurements. beginning after November 15, 2007. The Company is currently reviewing SFAS 157, but has not yet determined the impact on the Company's In September 2006, the FASB issued SFAS No.
158, "Employers' delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. The disclosure December 15, 2006, but before June 16, 2007 and the measurement December 15, 2008. The Company is currently reviewing SFAS 158, but Prior to January 1, 2006, the Company accounted for stock-based Opinion No.
25, "Accounting for Stock Issued to Employees", and related Interpretations, as permitted by SFAS No. 123, "Accounting to stock options for the three and nine months ended September 30, Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123(R), "Share-Based Payment" ("SFAS 123(R)"), using the modified-prospective method.
Under the modified-prospective method, compensation expense recognized in the three and nine months ended September 30, 2006, includes: (a) compensation expense for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant-date SFAS 123, and (b) compensation expense for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair Results for the three and nine months ended September 30, 2005, have the three months ended September 30, 2006 would have been $48.1 million and $50.6 million, respectively, if the Company had not $48.
2 million and $50.7 million, respectively and basic and diluted loss per share of $0.47 for the three months ended September 30, 2006 the nine months ended September 30, 2006 would have been $72.
8 million and $73.7 million, respectively, if the Company had not adopted SFAS 123(R) on January 1, 2006 and continued to account for share-based compensation under APB Opinion No. 25 compared to $74.
0 million and $74.9 million, respectively and basic and diluted loss per share for the nine months ended September 30, 2006 would have been $0.69, compared to a reported basic and diluted loss per months ended September 30, 2006, the Company recognized $0.
1 million and $1.2 million, respectively, of stock-based compensation expense wholly-owned subsidiary of the Company, acquired a 30% equity interest in AmTote International, Inc. ("AmTote") for a total cash purchase price, including transaction costs, of $4.
3 million. MEC additional 30% equity interest in AmTote, exercisable at any time acquisition. If MEC Maryland exercised the First Option, it had a 40% equity interest in AmTote, exercisable at anytime during the exercised.
In addition, in the event the holders of the AmTote shares the First Option, MEC Maryland could have been required to purchase On July 26, 2006, MEC Maryland acquired the remaining 70% equity interest of AmTote for a total cash purchase price of $9.3 million, including transaction costs of $0.1 million, net of cash acquired of $5.
5 million. AmTote is a leading provider of totalisator services to The purchase price, has been allocated to the assets and liabilities 4. Assets Held for Sale (a) On November 3, 2005, the Company announced that one of its estate in Palm Beach County, Florida had entered into an agreement to sell the real property to Toll Bros.
, Inc. (the $51.0 million in cash.
The proposed sale was subject to the completion of due diligence by the purchaser by April 3, 2006 and a closing by April 28, 2006. On April 3, 2006, the Company announced the termination of the sale agreement and, as such, the in the agreement. Upon termination of this agreement, a mortgage terms of the bridge loan.
The Company is considering its options with respect to this property. The Company has determined that the plan of sale criteria under SFAS No. 144, "Accounting for and accordingly, the property has been reclassified to reflect the carrying amount of the property in "real estate properties, (b) On November 9, 2005, the Company announced that it had entered Meadows, LLC, a company jointly owned by William Paulos and William Wortman, controlling shareholders of Millennium Gaming, Inc.
and a fund managed by Oaktree Capital Management, LLC ("Oaktree" and together, with PA Meadows, LLC, "Millennium- all of the outstanding shares of Washington Trotting Association, Inc., Mountain Laurel Racing, Inc. and MEC Pennsylvania Racing, subsidiaries of the Company, through which the Company owned and operated The Meadows, a standardbred racetrack in Pennsylvania.
On July 26, 2006, the Company announced that it had entered into an amended share purchase agreement, which modifies the Initial SPA with respect to the sale of The Meadows. As a result of of a gaming license by the PGCB, as well as significant changes the date of the Initial SPA, including regulations adopted by the and Washington County, the parties agreed to revise the terms of the Initial SPA. The $225.
0 million purchase price in the Initial SPA, which included a $39.0 million holdback, was reduced to $200.0 million, with a $25.
0 million holdback payable to the Company over a five-year period, subject to offset for certain indemnification obligations. In exchange for the shares of The Meadows Entities, the Company received two notes representing the Note") and $25.0 million (the "Second Note").
On September 27, 2006, the PGCB granted approval to Washington Trotting Association, Inc. of a Conditional Category 1 Gaming License. The First Note is expected to be repaid by November 14, 2006.
Due License, the parties have agreed to modify the terms of the Second Note. The amount of the Second Note will remain intact, however, the Company has agreed to release the security requirement for the holdback amount, defer subordinate payments the opening of the permanent casino at The Meadows, in exchange equity support for PA Meadows, LLC. If the First Note is not repaid by November 2, 2006, the Company retains the right, from November 3, 2006 until such repayment, to cancel the two notes Entities.
Concurrently with entering into the amended share purchase agreement, the parties entered into a racing services operations at The Meadows, on behalf of Millennium-Oaktree, for September 30, 2006 and December 31, 2005 are shown below. All as current at September 30, 2006 and December 31, 2005 as the credit facility and the Company's bridge loan agreement with MID, The Meadows, as described in section (b) above, to fully pay down The Company is also required to repay $2.0 million of the BE K, Inc.
construction loan within 30 days after the collection of the (a) On August 25, 2006, a wholly-owned subsidiary of the Company Ontario to Magna International Inc. ("Magna"), a related party, for cash consideration of Cdn. $51.
8 million (U.S. $46.
4 million), net of transaction costs, subject to various closing adjustments. The Company recognized an impairment loss of fair values at the date of disposition. Of the sale proceeds, Cdn.
$32.6 million (U.S.
$29.3 million) was used to pay all Creditanstalt AG related to the Magna Golf Club. In addition, a subsidiary of MID received a fee of Cdn.
$0.2 million (1% of the (b) On May 26, 2006, the Company completed the sale of a restaurant consideration of $2.0 million, net of transaction costs, and (c) On August 16, 2005, the Company and Great Canadian Gaming Ontario Racing, Inc.
("ORI"). Required regulatory approval for the sale transaction was obtained on October 17, 2005 and the Company completed the transaction on October 19, 2005. On closing, GCGC paid Cdn.
$50.7 million (U.S.
$43.1 million) and U.S.
$23.6 million, in cash and assumed ORI's existing debt. (d) On August 18, 2005, three subsidiaries of the Company entered the outstanding shares of Maryland-Virginia Racing Circuit, Inc.
managed the operations of Colonial Downs, a thoroughbred and standardbred horse racetrack located in New Kent, Virginia, pursuant to a management agreement with Colonial LP, the owner of Colonial Downs. Required regulatory approval for the sale transaction was obtained on September 28, 2005 and the Company completed the transaction on September 30, 2005. On closing, the Company received cash consideration of $6.
8 million, net of transaction costs, and a one-year interest-bearing note in the principal amount of $3.0 million, which was repaid as at September 30, 2006 and 2005 is as follows: In accordance with U.S.
GAAP, the Company estimates its annual the year, based on current facts and circumstances. The Company has months ended September 30, 2006 and 2005, resulting in an income tax September 30, 2006 and 2005, respectively, and an income tax expense 30, 2006 and 2005, respectively. The income tax expense for the nine months ended September 30, 2006 and 2005 primarily represents income tax expense recognized from certain of the Company's U.
S. operations that are not included in the Company's U.S.
consolidated income tax (a) On July 26, 2006, the Company amended and extended its senior secured revolving credit facility. The maturity date was extended from July 31, 2006 to November 6, 2006, unless further extended with the consent of both parties, and the maximum permitted $50.0 million.
The facility was also amended to provide for an closing of the sale of The Meadows, after repaying the MID bridge loan. The credit facility is available by way of U.S.
dollar loans and letters of credit. Loans under the facility are secured second charge on the assets of Santa Anita Park, and are guaranteed by certain subsidiaries of the Company. In addition, that owns AmTote.
At September 30, 2006, the Company had borrowings of $39.9 million (December 31, 2005 - $27.3 million), had issued letters of credit totaling $23.
5 million (December 31, amounts outstanding of $0.3 million under the credit facility, outstanding under the credit facility as at September 30, 2006 was 9.5% (December 31, 2005 - 9.
3%). (b) On July 31, 2006, one of the Company's European subsidiaries 2.5 million and its bank term loan of Euros 2.
9 million. The facilities into one bank term loan, requiring the repayment of Euros 0.9 million on July 31, 2006, extending the term to July 31, 2007 and requiring a further repayment of Euros 0.
7 million on January 31, 2007. The bank term loan bears security for this bank term loan. At September 30, 2006, the On November 17, 2005, a subsidiary of the Company entered into a loan agreement with BE K, Inc.
, the parent company of Suitt Construction Co. Inc., the general contractor for the reconstruction of the racetrack facilities at Gulfstream Park, for a loan of up to related to the reconstruction.
The loan agreement was amended on June 30, 2006, and the loan amount was increased to $16.6 million. The loan matures on April 14, 2007 and may be extended at the lender's option to July 31, 2008.
The loan bears interest at the U.S. prime rate plus 0.
40% per annum (September 30, 2006 - 8.65%) and may be repaid at any time, in whole or in part, without penalty. Loans under the facility are secured by a mortgage over land in Ocala, Florida and a guarantee of $5.
0 million by the Company. The Company Meadows, after repaying the MID bridge loan and the $39.0 million required under the senior secured revolving credit facility, within Meadows.
At September 30, 2006, $12.2 million is outstanding under 9. Capital Stock and Long-Term Incentive Plan for the three and nine months ended September 30, 2006 are shown 2000 allows for the grant of non-qualified stock options, stock, bonus stock and performance shares to directors, officers, employees, consultants, independent contractors and agents.
A remain available to be issued under the Plan, of which During 2005, the Company introduced an incentive compensation program for certain officers and key employees, which will award Plan. The number of shares of Class A Subordinate Voting Stock the Compensation Committee of the Board of Directors. These December 31, 2005 and are distributable, subject to certain conditions, in two equal installments.
The first distribution occurred prior to March 31, 2006 and the second distribution is to occur on or about March 31, 2007. During the year ended either U.S.
$6.26 or Cdn. $7.
61 per share. At December 31, 2005, there were 199,471 performance share awards vested with an average grant-date market value of either U.S.
$6.26 or Cdn. During the nine months ended September 30, 2006, 115,408 of these of $0.
7 million. Accordingly, there are 84,063 vested performance For 2006, the Company continued the incentive compensation program as described in the immediately preceding paragraph. The 31, 2006 and will be distributed, subject to certain conditions on or about March 31, 2007.
In the nine months ended September 30, 2006, 161,099 performance share awards were granted under the U.S. $6.
80 or Cdn. $7.63 per share, 1,616 performance share awards were issued and 12,490 performance share awards were forfeited.
As at September 30, 2006, there were 112,106 value of either U.S. $6.
80 or Cdn. $7.63 per share and there were 34,887 non-vested performance share awards with an average grant- date market value of either U.
S. $6.80 or Cdn.
$7.63 per share. nine months ended September 30, 2006, respectively.
As at related to these performance shares is $0.2 million, which is to December 31, 2006. In the nine months ended September 30, 2006, 25,896 shares with a 30, 2005, 14,175 shares with a stated value of $0.
1 million) were The Company grants stock options to certain directors, officers, Class A Subordinate Voting Stock. All of such stock options give value of such stock at the date of grant. Generally, stock expire on or before the tenth anniversary of the date of grant, Information with respect to shares under option at September 30, Balance at January 1 4,827,500 4,500,500 $6.
14 $6.18 expired(i) - (145,000) - 6.76 Balance at March 31 4,827,500 4,845,500 $6.
14 $6.19 expired(i) (64,000) (88,000) 6.80 7.
32 Balance at June 30 4,763,500 4,912,500 $6.13 $6.18 expired(i) - (150,000) - 8.
08 (i) For the three and nine months ended September 30, 2006 and 2005, options forfeited were primarily as a result of resignations. No options that were forfeited for the three and nine months ended September 30, 2006 and 2005 were At September 30, 2006, the 4,763,500 stock options outstanding During the three and nine months ended September 30, 2006, no 30, 2005 - no options were granted; for the nine months ended stock price volatility. Because the Company's stock options have can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a ended September 30, 2006 related to stock options was approximately $0.
1 million and $1.2 million, respectively (for the three and nine months ended September 30, 2005 - nil). As at September 30, 2006, the total unrecognized compensation expense related to stock options is $0.
5 million, which is expected to be For the three and nine months ended September 30, 2006, the $2.1 million, respectively (for the three and nine months ended September 30, 2005 - $0.7 million and $0.
9 million, respectively) relating to performance share awards, director compensation and Options to purchase Class A Subordinate Voting Stock 4,764 convertible at $7.05 per share 21,276 convertible at $8.50 per share 8,824 September 30, 2006, options to purchase 4,763,500 shares, notes convertible into 30,100,124 shares and 231,056 performance share September 30, 2005, options to purchase 4,762,500 shares, notes convertible into 30,100,124 shares and 210,122 performance share of $0.
2 million (December 31, 2005 - $0.6 million)(i) $ 99,536 $ 72,060 (December 31, 2005 - $3.7 million)(ii) 127,800 93,646 (December 31, 2005 - nil)(iii) 6,508 - payable of $0.
4 million (December 31, 2005 - $0.3 million)(iv) 31,117 19,854 Less: due within one year (100,638) (72,060) In July 2005, a subsidiary of the Company's parent company, MID, provided to the Company a non-revolving bridge loan facility of up to $100.0 million.
As at September 30, 2006, tranches since July 22, 2005, a total of $100.0 million was drawn under this facility. An arrangement fee of $1.
0 million was paid on closing, a second arrangement fee available to the Company. On July 26, 2006, the Company the bridge loan maturity date was extended from August 31, 2006 to December 5, 2006. In connection with the amendments on July 26, 2006, there was an extension fee of $0.
5 million the sale of The Meadows is not met. At the time of the July 26, 2006 amendment, it was expected that the applicable deadline would occur on or about November 6, 2006. Due to earlier than had been expected, the due date for the additional fee is now November 3, 2006.
In the event the sale of The Meadows is not completed by November 7, 2006, apply. There is a commitment fee of 1.0% per year on the loan commitment, payable quarterly in arrears.
At the Company's option, the loan bears interest either at: (1) floating rate, with annual interest equal to the greater of (a) U.S. Base Rate, as announced from time to time, plus monthly in arrears); or (2) fixed rate, with annual interest subject to certain conditions.
The overall weighted average September 30, 2006 was 11.8% (December 31, 2005 - 10.9%).
The bridge loan may be repaid at any time, in whole or in part, without penalty. The bridge loan requires that the net reduce outstanding indebtedness under the bridge loan, other indebtedness. Also, subject to specified exceptions, other specified indebtedness.
The bridge loan is secured by guaranteed by certain subsidiaries of the Company. The addition, the Company has pledged the shares and licenses of security for the loan, the Company has also assigned all subsidiaries and all insurance proceeds to the lender, and registered security. The bridge loan is cross-defaulted to indebtedness.
The security over the lands owned by The On September 29, 2006, the Company amended the bridge loan with MID. The maximum permitted borrowings under the bridge would be taken during the fourth quarter of 2006. The maturity date remains unchanged as December 5, 2006.
An During the nine months ended September 30, 2006, $25.9 million was advanced on this bridge loan, such that at September 30, 2006, $100.0 million was outstanding under the bridge loan and $19.
0 million was unused and available. Net as a reduction of the outstanding bridge loan balance. The the term to maturity.
In addition, during the nine months ended September 30, 2006, $8.0 million of commitment fees loan, of which $0.2 million was outstanding as at September Flamboro Downs sale proceeds, and such additional amounts as costs can be funded, into escrow with MID, (ii) MID waive its negative pledge over the Company's land in Ocala, Florida, (iii) Gulfstream Park enter into a definitive agreement with BE K, Inc.
, for debt financing of sales to pay down the bridge loan, and (v) in the event that to December 1, 2005 to sell The Meadows or repay the full balance of the bridge loan by January 15, 2006, MID would be the Company. Upon the closing of the sale of The Meadows, MID, the amount required to pre-pay the loan from BE K, Inc. On February 9, 2006, the bridge loan was further amended guarantors of the bridge loan.
The guarantees are secured by in California, Dixon Downs in California, Palm Meadows Residential in Florida, the New York lands in New York and the Thistledown lands in Ohio, and by pledges of the shares As at September 30, 2006, $7.1 million of the funds the Company placed into escrow with MID remains in escrow, which credit facility and the bridge loan agreement, the Company the two loans in equal portions. However, both MID and the agreed to mutually waive this repayment requirement, subject to certain other amendments, including provisions for In December 2004, certain of the Company's subsidiaries facilities at Gulfstream Park.
This project financing arrangement was amended on July 22, 2005 in connection with below. The project financing is made by way of progress draw advances to fund reconstruction. The loan has a ten-year term from the completion date of the reconstruction project, which was February 1, 2006.
Prior to the completion date, cost of borrowing under its floating rate credit facility, compounded monthly. After the completion date, amounts 10.5% per annum, compounded semi-annually.
Prior to January 1, 2007, payment of interest will be deferred. Commencing January 1, 2007, the Company will make monthly blended amortization period commencing on the completion date. The loan contains cross-guarantee, cross-default and cross- collateralization provisions.
The loan is guaranteed by the operations at Gulfstream Park, Remington Park, Palm Meadows Park, Remington Park, Palm Meadows and The Meadows, excluding licenses and permits. The security over the lands financings of up to U.S.
$200.0 million for the redevelopment of The Meadows. During the nine months ended September 30, 2006, $24.
8 million was advanced and $9.4 million of interest was accrued on this loan, such that at September 30, 2006, $131.3 million was outstanding under the Gulfstream Park loan, including $13.
1 million of accrued interest. Net loan origination expenses of $3.5 million have On July 26, 2006, certain of the Company's subsidiaries that new tranche of $25.
8 million, plus lender costs and capitalized interest, to fund the design and construction of Park clubhouse building, as well as related capital expenditures and start-up costs, including the acquisition The new Gulfstream Park financing has a five-year term and, consistent with the existing Gulfstream Park facility, bears semi-annually. Prior to January 1, 2007, interest on the new tranche will be capitalized. Beginning January 1, 2007, the on that date.
Advances related to the slot facility will be cash flow, after permitted capital expenditures and debt service, to be used to repay the additional principal amount being made available under the new tranche. A lender fee of amendments. During the nine months ended September 30, 2006, accrued on this loan, such that at September 30, 2006, $7.
1 million was outstanding under this tranche, including $0.1 million of accrued interest. Net loan origination of the outstanding loan balance.
The loan balance is being In July 2005, the Company's subsidiary that owns and build-out of the casino facility at Remington Park. Advances fund the capital expenditures relating to the development, design and construction of the casino facility, including reconstruction project, which was November 28, 2005. Prior to the completion date, amounts outstanding under the loan floating rate credit facility, compounded monthly.
After the completion date, amounts outstanding under the loan bear interest at a fixed rate of 10.5% per annum, compounded semi-annually. Prior to January 1, 2007, payment of interest will be deferred.
Commencing January 1, 2007, the Company completion date. Certain cash from the operations of loan. The loan is secured by all assets of Remington Park, excluding licenses and permits.
The loan is also secured by cross-guarantee, cross-default and cross-collateralization provisions. During the nine months ended September 30, 2006, $12.4 million was advanced, $2.
3 million of interest was accrued and $3.4 million was repaid on this loan, such that at September 30, 2006, $32.4 million was outstanding under the Remington Park loan, including $0.
4 million of accrued interest. Net loan origination expenses of $1.3 million have balance.
The loan balance is being accreted to its face in Romulus, Michigan, which was scheduled to expire on September 5, 2006 but has been extended until November 6, 2006. If the its expiry, then the Company may incur a write-down of the costs property and in pursuit of a racing license. At September 30, 2006, the Company has incurred approximately $2.
9 million of (c) On March 31, 2006, the Company sold a non-core real estate of $5.6 million, net of transaction costs. The gain on sale of the property of approximately $2.
9 million, net of tax, is reported as a contribution of equity. In accordance with the terms of the senior secured revolving credit facility, the (d) On August 25, 2006, a wholly-owned subsidiary of the Company completed the sale of the Magna Golf Club located in Aurora, Cdn. $51.
8 million (U.S. $46.
4 million), net of transaction costs, subject to various closing adjustments. The Company disposition. A subsidiary of MID received a fee of Cdn.
12. Commitments and Contingencies wagering activities and, therefore, it is subject to the risks inherent in the ownership and operation of a racetrack. These include, among others, the risks normally associated with changes in the general economic climate, trends in the gaming industry, lottery commissions, and changes in tax laws and gaming laws.
(b) In the ordinary course of business activities, the Company may be contingently liable for litigation and claims with, among others, customers, suppliers and former employees. Management believes required. Although it is not possible to accurately estimate the extent of potential costs and losses, if any, management believes, but can provide no assurance, that the ultimate construction projects related to activity of its subsidiaries.
At September 30, 2006, these indemnities amounted to $7.1 million (e) Contractual commitments outstanding at September 30, 2006, which related to construction and development projects, amounted to (f) In October 2003, the Company signed a Letter of Intent to explore Enterprises, Inc. ("Forest City") and various affiliates of the Company, anticipating the development of a portion of the Gulfstream Park racetrack property.
Forest City has paid work exclusively with the Company on this project. This deposit project consisting of residential units, parking, restaurants, hotels, entertainment, retail outlets and other commercial use projects on a portion of the Gulfstream Park property. Forest as an initial capital contribution.
The $2.0 million deposit $2.0 million of the initial capital contribution.
The Company is excess of $15.0 million as and when needed, however, to September 30, 2006, the Company has not made any such contributions. In the event the development does not proceed, the Company may have an incurred to that point in time.
As at September 30, 2006, Village at Gulfstream Park, LLC, which have been funded entirely by Forest City. The Limited Liability Company Agreement also (g) In April 2004, the Company signed a Letter of Intent to explore racetracks. Upon execution of this Letter of Intent, the Company projects, with the goal of entering into operating agreements.
As at September 30, 2006, the Company has expended approximately $5.2 million on this initiative, of which $3.4 million was paid during the nine months ended September 30, 2006.
These amounts balance sheets. Under the terms of the Letter of Intent, the Company may be responsible to fund additional costs, however to September 30, 2006, the Company has not made any such payments. On September 28, 2006, certain of the Company's affiliates Anita Park.
This development project contemplates a mixed-use development with approximately 800,000 square feet of retail, entertainment and restaurants as well as 4,000 parking spaces. vested liabilities exceed its assets. Based on allocation information provided by the plan, the portion of the estimated Company's subsidiary is approximately $3.
7 million. Under specific circumstances, a "withdrawal liability" may be triggered by certain actions, which includes withdrawal from the pension plan. The Company does not have any present intention to organized and managed by senior management, including its President and Chief Executive Officer.
The Company has two principal operating operations. The racing and gaming segment has been further segmented include Laurel Park, Pimlico Race Course, Bowie Training Center and include Lone Star Park, Remington Park's racing and gaming operations The Meadows and its OTB network, Thistledown, Great Lakes Downs, include XpressBet(R), HorseRacing TV(TM) and AmTote. The Corporate head office, cash and other corporate office assets and investments in racing related real estate held for development.
Eliminations reflect the elimination of revenues between business units. The real The Company, including its President and Chief Executive Officer, uses revenues and earnings (loss) before interest, income taxes, financial performance internally. Management believes that the use of compare, from period to period, operating and financial performance capital structures, which vary between companies.
Because the Company uses EBITDA as a key measure of financial performance, the Company is required by U.S. GAAP to provide the information in this note concerning EBITDA.
However, these measures should not be considered as an alternative to, or more meaningful than, net income (loss) as a measure of the Company's operating results or cash flows, or as a Corporate and other 97,035 108,015 Total racing and gaming operations 1,261,159 1,215,484 Golf and other 52,445 52,958 Total real estate and other operations 52,445 55,458 Total assets held for sale 79,538 79,312 On November 1, 2006, a wholly-owned subsidiary of the Company sold Club located in Oberwaltersdorf, Austria to a subsidiary of Magna for a sale value of Euros 30.0 million (U.S.
$38.3 million). The Company (U.
S. $16.9 million) and approximately Euros 16.
8 million (U.S. $21.
4 million) of debt has been assumed by Magna. In addition, All rights reserved. All the news releases provided CNW Group are copyrighted.
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