Jilted bidder objects to Penn National's track purchase

Penn bid $10.25 million for Rosecroft Raceway

February 01, 2011|By Hanah Cho, The Baltimore Sun

A jilted bidder is objecting to casino operator Penn National Gaming's $10.25 million purchase of bankrupt Rosecroft Raceway, arguing it had the higher and better offer at last week's auction.

Landow Partners, whose principals include former state Democratic Party Chairman Nathan Landow, said the trustee overseeing Rosecroft's bankruptcy "did not exercise the appropriate business judgment and failed to obtain the maximum value" for the Prince George's County harness track, according to court documents filed Tuesday.

A bankruptcy judge in Greenbelt will hear Landow's objection at a hearing Wednesday to consider the sale.

Penn's bid also included an additional $3 million if the Maryland General Assembly approves a bond issue to help finance the track's operations.

The Landow group's final bid was $10.05 million in cash, plus $3 million for a similar bond issue. In addition, the Landow group offered $3 million if a referendum to expand gambling is approved in the state and slots becomes operational at Rosecroft. Landow Partners said in court documents that the trustee "placed little or no value" on the premium for slots.

Moreover, Landow Partners argued in court papers that its $3 million payment for the bond issue is worth more because the group had obtained an agreement with the harnes horse owners and trainers to ensure live racing will resume at Rosecroft. That agreement also provides that the standardbred breeders and owners associations can't negotiate with any other owner until 90 days after the Rosecroft sale closes.

Michael J. Lichtenstein, the attorney representing the trustee, said the Landow group has "no legitimate objection."

"We think the trustee exercised his business judgment and operated as a fiduciary," he said.

Penn National also outbid lawyer and Orioles owner Peter G. Angelos.

In separate news, the majority owner of Maryland's two thoroughbred tracks has agreed to a deal that would transfer all of its racing assets, including Laurel Park and Pimlico Race Course in Baltimore, to its chairman and chief executive Frank Stronach.

In exchange, Stronach will give up control of Ontario-based MI Developments, according to the agreement announced late Monday. Stronach currently controls 57 percent of the real estate company's voting power.

The restructuring means the racing operations would become a separate entity with assets including horse racing technology firm AmTote International, the Hunt Valley-based electronic bet-processing company.

The deal, which was approved by MI Developments' board, also requires the approval of shareholders and the Ontario Superior Court of Justice. The deal is expected to close by June 30.

MI Developments owns Laurel Park and Pimlico under a joint venture with Penn National.



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