- Current report filing (8-K)
February 20 2009 - 2:29PM
Edgar (US Regulatory)
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act
of 1934
Date of Report (Date of
Earliest Event Reported):
February 18, 2009
MAGNA ENTERTAINMENT CORP
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(Exact Name of Registrant as
Specified in its Charter)
Delaware
(State or Other Jurisdiction
of Incorporation)
000-30578
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98-0208374
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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337 Magna Drive, Aurora,
Ontario, Canada
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L4G 7K1
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(Address of Principal
Executive Offices)
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(Zip Code)
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(905) 726-2462
(Registrants Telephone
Number, Including Area Code)
Not Applicable
(Former Name or Former
Address, if changed since Last Report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions (see General Instruction A.2.
below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Item 1.02 Termination
of a Material Definitive Agreement
On February 18, 2009, MI Developments, Inc. (MID), the Registrants controlling shareholder, terminated the November 25, 2008 transaction agreement (the Transaction Agreement) between the Registrant, MID and entities affiliated with MECs Chairman and Chief Executive Officer, Frank Stronach.
The
Transaction Agreement contemplated, among other things, a multi-step series of
proposed transactions designed to recapitalize and reposition the Registrant to
enable it to pursue its strategy of horse racing, gaming and entertainment on a
standalone basis. The Transaction Agreement was previously filed as Exhibit
10.1 to the Registrants Form 8-K filed with the Securities and Exchange
Commission on December 2, 2008.
As a result of MIDs decision regarding the reorganization proposal and
Transaction Agreement and in accordance with the terms of certain of the
Registrants loan agreements, the maturity date of the first tranche of the new
loan that a subsidiary of MID (MID Lender) made available to the Registrant
on December 1, 2008 in connection with the reorganization proposal (the New
Loan), the maturity date of the bridge loan from MID Lender and the deadline
for repayment of US$100 million under the Gulfstream project financing facility
from MID Lender will each be accelerated, respectively, to March 20, 2009.
The maturity date of the second tranche of the New Loan has already been
accelerated to May 13, 2009. As of February 18, 2009, there was
approximately US$48.5 million outstanding under the first tranche of the New
Loan, approximately US$0.7 million outstanding under the second tranche of the
New Loan and approximately US$126.2 million outstanding under the bridge loan.
In accordance with its terms, the maturity date of MECs US$40 million credit
facility with a Canadian chartered bank will also accelerate to March 5,
2009. If the Registrant is unable to repay its obligations when due or satisfy
required covenants in its loan agreements, substantially all of its other
current and long-term debt will also become due on demand as a result of
cross-default provisions within loan agreements, unless the Registrant is able
to obtain waivers, modifications or extensions. In the event MEC is
unsuccessful in its efforts to raise additional funds, through an alternative
transaction with MID, assets sales, by taking on additional debt or by some
other means, the Registrant will not be able to meet such obligations.
The full text of the Registrants February 18, 2009 press release
announcing that MID is not proceeding with the previously announced
reorganization proposal is attached as Exhibit 99.1 to this Current report
on Form 8-K and is incorporated by reference herein.
The Registrant is in discussions with MID
concerning alternatives to the reorganization proposal. The Registrant also
cautioned shareholders and others considering trading in securities of the
Registrant that there can be no assurance that any alternative transaction will
be completed.
Item 9.01 Financial Statements and Exhibits
(c)
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Exhibits
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Exhibit 99.1
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Press Release dated February 18, 2009.
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Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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MAGNA ENTERTAINMENT CORP.
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(Registrant)
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February 20, 2009
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by:
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/S/WILLIAM
G. FORD
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William G. Ford,
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Secretary
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2
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