Magna’s top bidder selection delayed

Posted: 4:35 pm Mon, November 9, 2009
By Liz Farmer
Daily Record Business Writer 

The company that owns Maryland’s thoroughbred race tracks has selected the leading bid for the properties but is delaying the announcement of that bidder until Wednesday.

Magna Entertainment Corp., which declared bankruptcy in March, was scheduled to select a stalking horse bidder by 5 p.m. Monday. The Ontario-based firm instead filed a motion asking a bankruptcy court judge permission to extend the deadline the company set for itself to Wednesday.

A stalking horse bid is an initial bid chosen by the company that competing bidders can bid against.

Magna placed Pimlico Race Course, Laurel Park and the Bowie Training Center on the auction block last month. The auction for the properties is scheduled for Jan. 8.

In its motion, the company said it is in talks with one of the initial bidders for the properties. The first round of bids were due Nov. 2, and Magna had initially said it would file a motion announcing its stalking horse bid Monday.

However, Magna said Monday it needed more time to finalize the negotiations for a purchase agreement with its selected bidder, in order to “maximize the value” for its properties.

Magna said the delay should not affect a scheduled hearing on Nov. 18 to address the stalking horse bid.

Baltimore-area developer Carl Verstandig has said he is a party in a bid submitted last week for Magna’s properties. The bid included the Maryland properties and tracks owned by Magna in California and Florida also up for auction.

Verstandig, who would not reveal the bidders’ names, said Monday the group had not been contacted by Magna about its bid. But he said not being selected as the stalking horse bid was not a setback for the group.

“The stalking horse basically means nothing at this point,” he said. “It puts a moving target out there for other folks to achieve against. … All someone has to do is bid a million or two higher than it and they come out on top.”

Verstandig reached an agreement with the group to pay $38 million for the land around Laurel and Pimlico if their’s is the winning bid. He said the group operates tracks and has gaming operations around the country and would likely be interested in bringing slots to Laurel Park if possible.

Baltimore developer David Cordish has also expressed his interest in bidding on Magna’s Maryland properties. A spokeswoman said Monday the company was not commenting on its involvement at this time.

After Magna announces its stalking horse bid, those who wish to bid against it will have until Dec. 4 to submit a bid to Miller Buckfire, the New York firm handling Magna’s assets auction.

Joseph De Francis, a former owner of the tracks, said last week he is keeping his eye on that deadline but would not say whether he would bid for the properties.

De Francis also filed a motion Friday to fight Magna’s attempt to terminate a profit-sharing agreement made in 2002 when his family sold controlling interest in Laurel and Pimlico to the company. That deal entitles De Francis, his sister Karin and others to 65 percent of any pre-tax, future profits the company receives from slot machines if the games are ever approved for the tracks. After five years that number drops to 50 percent for another five years, then 40 percent for the last 10 years of the agreement.

The deal applies to any future owner of the track as well. De Francis was traveling Monday and not available for comment.