Posted: 8:04 pm Thu, November 12, 2009
By Liz Farmer
Daily Record Business Writer
The bankrupt owner of Maryland’s thoroughbred race tracks is moving forward in its auction of the tracks without selecting a leading bidder, but interested buyers said that change is not a deterrent.
Magna Entertainment Corp. could not come to a purchase agreement late Wednesday with the bidder it had selected to make its “stalking horse bid,” an initial bid chosen by the company that competing groups can bid against.
Ontario-based Magna was scheduled to file a motion Wednesday in federal bankruptcy court in Wilmington, Del., announcing the stalking horse bidder for its Maryland properties — Pimlico Race Course, Laurel Park and Bowie Training Center — and had been in talks with a group that filed in the first round of bidding last week.
But a managing director of Miller Buckfire, the New York-based company handling Magna’s assets auction, said Thursday Magna could not reach an agreement they felt was “deserving” of a stalking horse bid.
“Just because someone puts forward a bid doesn’t mean we have to take it,” said Michael Wildish. “They pushed our limits, and they found them.”
Miller Buckfire will instead move on and wait for the second round of bids for the properties to arrive next month.
The auction can continue without a stalking horse, and Wildish said the change should not affect the auction, which is scheduled for Jan. 8 in New York. However, the Dec. 4 due date for the second round of bids may be pushed back.
Magna had asked for initial bids to be submitted to Miller Buckfire by Nov. 2 from which it was to select a stalking horse. Those submitting a bid in the second round would have had the stalking horse bid as a benchmark against which to measure their own proposals.
Magna placed its tracks in Maryland, California and Florida on the auction block last month.
Wildish would not say who had been involved in the initial round, but said he believed several groups did not participate because they were waiting to see what they’d have to compete against in the stalking horse bid.
“I think everyone wanted to see what everyone else was going to do,” he said.
Baltimore area developer Carl Verstandig is part of a group that submitted an initial bid for Magna’s properties, but he said the group was not in talks with Magna this week. The bid included the Maryland properties and Magna’s California and Florida tracks, and Verstandig said his partners were in the horse racing and gaming industry.
He said he was not surprised Magna couldn’t reach an agreement this week because none of the interested parties should be willing to show all their cards at this stage.
“Anyone who would want to stick themselves out there like that now would be foolish because they’re only setting themselves up to knock themselves out,” he said.
He added that the elimination of a stalking horse does not matter to the bidding group.
“The auction … will shake out the best offer,” he said.
Baltimore developer David Cordish has also expressed his interest in Magna’s Maryland properties, but a spokeswoman said the company was not commenting on its involvement.
Joseph De Francis, a former owner of the tracks, did not submit a bid last week but has said he is watching the Dec. 4 deadline. He said Thursday the elimination of the stalking horse bid did not change his plans, although he would not say whether he would submit a bid next month.
“We have always looked at the Dec. 4 date as the more meaningful date,” he said. “Initially when they set this timetable, it was our feeling that Nov. 2 was very, very quick to try to have meaningful bids in.”
To participate in the January auction, interested parties must submit a bid by Dec. 4.
John Franzone, chairman of the Maryland Racing Association, said he did not think the change would dampen interest in the tracks. But he did note a possible delay in the second round of bidding could delay a vote by the Anne Arundel County Council on whether to allow zoning for slots by the Arundel Mills mall. Cordish has bid with the state to operate a slots site at that site.
After much stalling, the council has scheduled a public meeting on the zoning legislation for Dec. 7, but if it goes past midnight, a final decision could be pushed to Dec. 21 or later.
“I think they set that date because originally Magna was going to be resolved by then,” Franzone said.