Sale of two tracks postponed

Magna works to strengthen agreement to keep Preakness in Maryland

January 06, 2010|By Andrea K. Walker |

Magna Entertainment Corp. agreed in bankruptcy court Tuesday to postpone the sale of two Maryland horse tracks as it works with bidders to provide reassurance that the Preakness would remain in the state.

A Delaware bankruptcy judge also allowed Magna to end a profit-sharing agreement with Joseph A. De Francis and other former owners of Laurel Park and Pimlico Race Course, who had a previous agreement to split any potential proceeds from slot machine gambling.

The auction, which was scheduled for Friday, will now be held Jan. 21, according to attorneys who attended the hearing. Six bidders have expressed interest in the tracks, including the Baltimore developer the Cordish Cos., Penn National Gaming Inc., the De Francis family and Blow Horn Equity LLC in Pennsylvania.

Magna has identified a lead bidder that would set the standard for the auction. As part of the negotiations with that bidder, Magna plans to work out an agreement to keep the Preakness, the second leg of horse racing's Triple Crown, in Maryland.

To bid on the tracks, interested parties had to agree to keep the Preakness in Maryland, but Magna is trying to add legal teeth to those agreements, said Dan Friedman, a Maryland assistant attorney general who attended Tuesday's bankruptcy court hearing.

The state has the right to review the bids and match any bid for the race. The General Assembly passed emergency legislation last year, signed by Gov. Martin O'Malley, giving the state authority to exercise a "right of first refusal" and acquire the tracks and Preakness through eminent domain.

Part of the agreement with the winning bidder would allow Maryland officials to seek a court injunction if anybody decides to relocate the race.

De Francis said he wasn't surprised that the judge ruled against him on the profit-sharing deal and that he hasn't decided whether to appeal.

"Typically, judges in bankruptcy proceedings go to great lengths to allow debtors to sell assets free of any pre-bankruptcy contractual obligations," he said.

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