MINOR TO MAKE BID ON BANKRUPT MAGNA
Halsey Minor, the Internet entrepreneur and Thoroughbred owner and breeder who made a failed bid to buy Hialeah Park from John Brunetti last year, is poised to make an offer to reorganize bankrupt Magna Entertainment (MEC) and take control of the company from founder Frank Stronach, the Paulick Report has learned.
The anticipated offer comes at a time when opposition to MEC’s plans to auction some of its assets is mounting from both creditors and shareholders in MI Developments, MEC’s parent company. According to a
published report, the creditors have focused on the control that Eclipse Award-winning owner and breeder Stronach wields over not just MEC, but MI Developments. MI Developments, in addition to being the largest shareholder in MEC, is a major creditor that in the bankruptcy filing made a stalking horse bid for some of MEC’s assets. The court-appointed committee of creditors charged the proceedings are “overrun with serious conflicts of interest.”Minor’s offer, the Paulick Report has learned, will pay off in full the debt owed to MI Developments by MEC (about $175 million), assume the debt on several bank notes while asking for an extension of time for repayment, and provide an option to the holders of $225 million in convertible bonds, either paying them roughly 25 cents on the dollar up front or offering 100% of the value as a new bond maturing in three years. Minor would take over management of the newly reorganized company upon acceptance of the deal by the creditors committee and the bankruptcy court.
This is not the first time Minor has made a run at MEC. Last October, the founder of the Internet company CNET proposed to the MI Developments board of directors that
he would buy the outstanding loans from MID to MEC. That offer was not accepted, but now that the company has entered chapter 11 bankruptcy proceedings it has far less wiggle room. “The goal would be to take control of the Magna tracks away from MI Developments and begin the process of rebuilding much of what has been harmed over the previous five years," Minor said in October. "Magna Entertainment, as a company, clearly has little chance of survival. The idea is to prevent a bankruptcy which would be disastrous for the industry and to begin to rebuild the company. The goal, first and foremost, is to stop the uncontrolled bankruptcy, which is almost inevitable. You can’t lose $120 million a year in this environment and continue.“Frank Stronach only owns 2% of MI Development but has been using that company to prop up Magna Entertainment, which has basically been a bankrupt company for three years. It only exists because MI Developments continues to put money into a company whose losses are in excess of $100 million a year.
Magna filed bankruptcy on March 5. Click here for the history of the company and here for a list of its major creditors.
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Tags: Frank Stronach, Halsey Minor, magna bankrupt, magna bankruptcy, Magna Entertainment, magna entertainment bankruptcy, mec, mi developments, mid, Paulick Report, Ray Paulick, stronach bankruptcy
April 2nd, 2009 at 2:32 pm
Yeah right, with who’s money?
April 2nd, 2009 at 2:49 pm
Grabbing Magna and revitalizing its tracks sounds like a terrific thing, if Mr.Harlan can pull it off.
I hated to see he wasn’t able to buy Hialeah, one of the finest tracks ever built, and the scene of so much thoroughbred history.
April 2nd, 2009 at 3:01 pm
Meet the new boss. Same as the old boss…
April 2nd, 2009 at 3:10 pm
Magna, MEC, MID whatever they want to call themselves, let’s face it they are all enter twined with each other in what is a growing problem among many other troubled companies these days. I say if Mr. Minor wants to give it a try to rescue, rebuild and restore the racetracks entities involved in this deal, go get ‘em Halsey! Just remember there are a lot of good people working at these tracks whose hands have been tied by Magna, so make good use of the talent out there while adding your own little twist to things and there may be a light at the end of the tunnel after all.
April 2nd, 2009 at 3:23 pm
If this was Jess Jackson, of whom I’m no fan, being discussed as a possible investor I wouldn’t be so skeptical. However with said person I’m reminded of the SNL character of Tommy Flanagan by Jon Lovitz. Yea, that’s the ticket.
He might have a lot of trophy properties but seemingly has a lot of legal issues too. From March 2009:
http://gawker.com/5182217/mouthy-internet-mogul-halsey-minor-might-be-broke
A lot of teary-eyed fans have been willing to hitch their wagon to anyone wanting to wrestle control of Hialeah away from JB and restore it like a phoenix. As such they seemingly look past these published problems of said person and lust for his confident statements.
Jaundiced eyed Maryland fans bamboozled by too many events in recent years hopefully aren’t going to get on board until someone can certify every bidder is BOTH liquid with enough money here and now to not only buy but improve the state of MD racing.
April 2nd, 2009 at 3:30 pm
This entire “comfy” deal between Magna and MI seems like a shell game, with - hey, wouldn’t you know! - the same incompetent fools back running the show at some point….because, well, they had a few tough breaks, but are now back on schedule with the books showing “zero’s” where the red ink flowed and flowed. This charade must cease and Magna as an entity needs to tossed into a landfill, with a new ownership group purchasing all or significant parts of the bankrupt company…..and I mean bankrupt in dollars and sense.
April 2nd, 2009 at 4:20 pm
Ray, I’d love to know what you and others think about this idea and about Halsey Minor. I’m so hoping that Laurel Park and Pimlico, especially, will be saved and restored and managed as they ought to be. Is Halsey Minor the man for the job?
April 2nd, 2009 at 5:16 pm
I certainly hope Halsey Minor is the man for the job if he is lucky enough to obtain Laurel and Pimlico. Maybe then we can get rid of Bowie and re-open Pimlico for training. Go for it Halsey.
April 2nd, 2009 at 5:28 pm
Good insight on Halsey Minor in this 2000 interview:
http://www.businessweek.com/1997/34/trans34/minor.htm
April 2nd, 2009 at 7:03 pm
Maryland horse racing deserves the best that it can get in terms of leadership, direction and well considered capital investment. Minor would not be my first choice for any of the aforementioned.
April 2nd, 2009 at 7:08 pm
I just read the article GlimmerGlass posted. How on earth can he be serious when he’s already up to his ears in personal lawsuits and debt? I’m all for someone bailing out Magna, but Minor appears to be wasting everyone’s time.
April 2nd, 2009 at 7:35 pm
HM has been the focus of many articles in the Charlottesville VA newspaper ‘The Hook’ in regards to his stalled (for lack of a better term) Landmark Hotel venture. Some might scoff at the aforementioned cited Gawker website (above) but you can easily read the Conde Nast ‘Portfolio’ feature or The Hook’s many articles to see a pattern of claims, counterclaims, lawsuits and questions of liquidity and net worth.
Again folks who are saying he’s a savior for the sport haven’t looked into his business issues or are turning a blind eye. He might own a few million dollar horses but that doesn’t translate into bidding $100M+ for a race course or fund their deficit operations.
http://www.readthehook.com/blog/index.php?s=landmark+hotel
This isn’t Marylou Whitney (as an example) and her fortune, credibility, or well-known loyalty for the sport we’re talking here. The last thing the sport needs is another uncertain owner.
April 2nd, 2009 at 8:31 pm
I am sorry that after all I try to do for the industry there are those who are so jaded they base their sole “facts” about me on Gawker and the Hook? Seriously have you even read these things? Hint: they are not the New York Times.
They are literary bloodsport. All can tell you is you will see whether i have money or not in due time and given my passion for the industry I hope you imagine Halsey with a checkbook.
As an FYI when I started CNET I was flat broke and yet I built it into a NASDAQ 100 company with 110,000,000 web visitors 6 TV shows a radio station and a $6 billion market cap, ultimately acquired by CBS. Maybe you should hope I am broke for the sake of the industry. Racing needs a CNET. Magna sure wasn’t one.
Best.
April 2nd, 2009 at 8:44 pm
Halsey, please save Santa Anita first. The fact that Ray Paulick seems to have confidence in you gives us hope, as he seems to know what is really going on.
April 2nd, 2009 at 10:46 pm
You better get thicker skin if you think you are gonna make a go of it in this game Halsey. You may have been a big success in business but so was Stronach and you are saying some of the same things he said when he started buying tracks. Honestly, dont bother if a few people on a horseracing site question your finances and you feel the need to respond.
April 2nd, 2009 at 10:59 pm
Go get em Mr. Minor.
April 2nd, 2009 at 11:01 pm
Halsey, rock on! But don’t do it for the sake of saving the industry, do it because racing is in your blood. You’ll be a better manager than most of the talking heads. And, you’ll have a hell of a lot more fun.
And for what it’s worth, make work on the backside a part of your management team’s training. Don’t hire people just because of who they know (or how well they golf). Advertise positions and have formal job interviews. Have job descriptions, employee manuals, and give achievement-based bonuses (vs. the ones currently given for just showing up for work). [Basic management principles that seem to have not quite made it to the horse industry.] You’ll be amazed at how many talented hardworking knowledgeable people with a passion for racing will join your team.
Best of luck!
April 3rd, 2009 at 1:48 am
WHO IS HALSEY BSing this time????? He has not finished one job yet, is being sued by everyone. Of course they are all wrong and he is the only one that is right. His supposed background in the horse business is slightly more than that of a pony ride operator at a circus. If he is such a standup guy then let him resolve all the promises he has made the multitude of people that are suing him. A fourth class bully with zero class. I predict he will be in bankruptcy pretty soon.
Someone should ask for audited financial statements before going one step further. Or I guess they can go to his lawsuit with ML to see the smoke and mirrors this guy has pulled. Not a good man and knows nothing about the horse business.
April 3rd, 2009 at 6:37 am
Doesn’t this all hinge on the bankruptcy court’s decision? Hasn’t a developer named Cordish made an offer on the Maryland tracks and the Preakness. If the tracks in Maryland were financially viable and featuring racing like they should, wouldn’t the horsemen and The Maryland Jockey Club need the Bowie Track? Pimlico is an absolute disaster and would need a significant facelift. I think the Bowie Track is worth saving, but not quite sure who owns or controls it now…it’s fate has been bouncing around for several years. God help the track employees and the horses; what a flaming mess!
April 3rd, 2009 at 11:37 am
Unlike what Mr. Waldrop believes, racing has done very little to clean itself since the death of Barbaro and Eight Belles. Talk is cheap and water seeks its own level. Instead of praying for some white knights to descend from the clouds to save tracks and racing, the industry should find the will to reform itself first, then create a strong, fresh and independent central authority based away from KY and NY (to keep things fresh)!
Racing needs to pass major reforms to stop the rotting of its “product” from the inside out. The anticipation of quality racing and sound governance would already make it easier to attract quality racetrack ownership and industry leadership. Racing shouldn’t handle its problems like NJ is stalling its anabolic steroids reform. Racing needs to grow a pair and find its moral compass to save itself first. Then the white knights will come because racing can be a clean, proud and rich sport.
April 3rd, 2009 at 12:33 pm
Oh wow, another loud mouth with some money who thinks he can change the industry? You know who that sounds like? The guy he is trying to replace.
April 3rd, 2009 at 12:50 pm
I understand the basis for parallels to Stronach made in some of these posts (although I wish they could be more erudite), but do you think Frank would ever deign himself to communicate in this kind of community forum? The post in this blog by Minor — in addition to some obvious passion for the sport and a successful business trackrecord running a start-up — surfaces at least three refreshing potential differentials from the current incumbent. We wish you well. So pull the trigger.
April 3rd, 2009 at 2:49 pm
Assuming comment #13 is indeed the real Mr. Minor’s response, the phrase that disturbs me is “after all I try to do for the industry.†While I respect what Mr. Minor has already accomplished, and what he might be able to achieve for the racing industry, I doubt he is any more likely to succeed singlehandedly as racing’s savior than Mr. Stronach.
If Mr. Minor’s good intentions match his resources and his passion for racing, then he should be able to find partners among other influential individuals with similar motivation to collectively benefit racing and share the honors as well as the accompanying responsibilities and decision-making. The reported manner in which both Mr. Brunetti and Mr. Stronach have already rebuffed Mr. Minor’s overtures suggest that the egos involved are the main obstacles to be overcome at their level of participation.
It is not unreasonable to question the motivation of some of his detractors here and their ability to make any positive contributions of their own, but hopefully Mr. Minor does not want to enter the game without a level of support, respect, and expectation for success much higher than that currently attributed to either of the other gentlemen previously mentioned.
April 3rd, 2009 at 3:19 pm
Look, all these guys are big fish with uber-egos. They are frequently involved in litigation, for many reasons. The “Hook” is a rag. Is Minor a problem child? Probably. To take over the entire MEC is probably not wise for Minor (you need cash reserves and a deep, deep pocket to unscrew this racingmuck mired mess). He’s bought on to premier VA real estate, some bloodstock and awaiting litigation on other projects. To stay on Brunetti for performance default at Hialeah (it can be done) and taking on the Maryland tracks may have a chance….to assume all of MEC is a nightmare. Let the banckruptcy judge make the decision and then scoop up the broken up leftovers…it will save you money. At the same time, a central authority for racing with the track owners w/state boards on board is essential (w/AAEP, trainers, breeders, jocks and fan/bettors as major players) to bring street cred back to the game.
But, I’m an idiot…why do I keep repeating this?
BTW..another “mall troll” showed up and is going to develop Pimlico and Laurel for “malls”; FYI…the malls at Laurel and Pikesville are beyond dead. The developers (in this market?)…aren’t going to do squat to save Maryland racing. They buy it at a discount and thenjust sit on it…just ask Brunetti.
April 4th, 2009 at 9:06 am
This will never happen. Minor cant even pay his bills. His current developments are halted and more litigation coming. He is being sued by several auction houses over lavish art that he thought would vault him to the echelon. OOPS, you mean I actually have to pay for it? This He got lucky in the web and then blew it. Under the current proposed auction, Frank will be able to bid on these properties personally, Frank has an ego and ten times the money this kid HAD. He will be squashed like a bug. Trust me on this one.
April 4th, 2009 at 11:56 pm
I have never met Halsey Minor, but I do know his immediate family, and they are extremely honorable people with good moral and ethical standards. I believe that too many people have rushed to judgement based on media reports from information gathered through media reports and legal proceedings which have yet to be completely discovered and/or settled, and from “information” provided by spin-rooms, spin-doctors, former business associates, former employees, etc., etc.
All Americans deserve the right to innocence until proven guilty. Based on the currently available facts, it appears that Halsey Minor has a number of business issues to deal with, both simple and somewhat difficult. He should be allowed the opportunity to protect and defend himself without a gazillion people on the internet rushing to judgement based on incomplete information. Yes, he has been very successful in the past, and he has probably lost more money speculating on future technologies than most people will ever earn in their lifetime. How many people posting comments here (and on other forums) can equal that? Thomas Edison had similar situations during his career. As a matter of fact, in 1894, Thomas Edison declared bankruptcy for the North American Phonograph Company. Comparatively speaking, Edison had his share of wannabe critics as well, but in the end he prevailed as a success.
Halsey Minor has proven that he has the capability of building and managing large scale businesses with countless employees. If he has the means to finance, manage, reorganize and resurrect a business… any business for that matter… then I wish him God-speed, as our country needs people with drive and vision like Halsey Minor, to provide employment at a time when it is so desperately needed.
April 5th, 2009 at 7:03 am
If simply providing employment is the only criterion necessary to justify anyone’s vision for operating thoroughbred racetracks, then Mr. Schubert’s comments apply equally to Mr. Stronach. Innocence until proven guilty applies only to criminal prosecution; not to obtaining credit and/or establishing credibility.
Subsequent to this blog entry, The Blood Horse reported some details of Mr. Minor’s bid:
‘… Minor, based in San Francisco, said that if his bid is accepted he would “have control†of as many as nine of MEC’s 10 North American race tracks. He said financing for buying the loans and bonds would come from a combination of his own equity and from other investors, whom he would not identify.â€
… Minor said he is not interested in Gulfstream because “I hope to have Hialeah (Park) in three or four years.â€
… He said part of his goal in pursuing MEC tracks is to “to keep racing at Golden Gate Fields (in Albany, Calif.) and prevent it from being redeveloped as a shopping mall.†…’
On the surface it would seem that Mr. Minor would keep jobs within the racing industry and prevent further developer encroachment on racetracks like that at Bay Meadows and Hollywood. However, it isn’t inappropriate to look beyond that and ask how his operation of those nine properties would reverse declining handle and attendance at those venues; and rekindle interest in racing generally.
The opportunity to express our concerns, skepticism, support, and/or enthusiasm — and to speculate on the yet unknown and/or unrevealed — are what this and other internet forums are all about. When individuals use this medium to introduce themselves and their agendas, they should expect all variants of that expression in response. None of it should prevent Mr. Minor from acquiring whatever control over some MEC properties that money alone will obtain for him if he is willing and able to pay the price, and doesn’t violate any laws. Whether that will enable him to achieve whatever it is he has in mind – and how that might affect other industry participants — remains to be seen.
April 5th, 2009 at 9:58 am
In response to the Indulto post… My use of the phrase “innocence until proven guilty” was used as a metaphor.