Judge approves Magna Entertainment’s sale of Thistledown, Remington tracks for almost $170M

Bankruptcy judge OK’s Thistledown, Remington sales

WILMINGTON, Del. — A Delaware bankruptcy judge on Tuesday approved the sale of two of Magna Entertainment Corp.’s horse racing tracks — Thistledown in Ohio and Remington Park in Oklahoma City — for a combined total of almost $170 million.

Judge Mary Walrath approved the results of a spirited auction on Monday that ended with a winning bid of $89.5 million for the Thistledown track near Cleveland from Harrah’s Operating Co., a wholly owned subsidiary of Nevada-based casino giant Harrah’s Entertainment Inc.

Harrah’s offered $42 million in cash at closing and contingent payments of $47.5 million.

The contingent payments hinge upon successful resolution of various legal challenges to Ohio’s plan to install slot machines at the state’s seven horse tracks. Plaintiffs have filed lawsuits seeking to have the issue put to voters in a referendum, and challenging whether slot machines are permitted under Ohio’s constitution and meet the state’s definition of a lottery.

Also Tuesday, Walrath approved the sale of Remington Park for $80.25 million to Global Gaming Solutions RP LLC, a subsidiary of the Chickasaw Nation that plans to continue casino and racing operations at the track.

Ontario-based Magna Entertainment, the largest horse-track owner in the United States, filed for bankruptcy protection in March, saying it was unable to obtain new financing while supporting its existing debt.

Its holdings also include Gulfstream Park in Florida, Lone Star Park in Grand Prairie, Texas, and Baltimore’s Pimlico racetrack — host of the Preakness Stakes, the second leg of the Triple Crown.

Brian Rosen, an attorney representing Magna, said the Thistledown auction involved more than 40 rounds of bidding after a lead, or stalking-horse bid, by Penn National Gaming of $22.3 million in cash.

“This track has taken on a tremendous amount of interest because of the expected commencement of gambling permitted at seven race tracks in Ohio,” Rosen added.

Rosen told Walrath that he would submit a sale order for her signature later Tuesday, the deadline for Ohio horse track owners to make $13 million payments toward their $65 million slots licensing fees.

“We are excited to be entering Ohio and look forward to developing a first-class facility in Cleveland which will create significant employment opportunities in the region,” Harrah’s said in a statement issued after the hearing.

In approving Harrah’s bid for Thistledown, the judge said Penn National, bidding through an entity called Cleveland Gaming Ventures LLC, was not entitled to breakup fees and expense reimbursements that could have totaled more than $500,000.

Attorneys for Magna, its creditors committee, and Penn National argued that Penn was entitled to the fees for setting the stage for a successful auction.

“We were the starting gun for the race,” an attorney for Penn argued.

But Craig Reimer, an attorney for Harrah’s, said the stalking horse bid was not presented to Harrah’s or the other bidder, a subsidiary of Pinnacle Entertainment, until the scheduled auction time. Reimer argued that there was no time for Penn’s stalking horse bid to be marketed in an effort to increase interest in the auction and solicit higher offers, or any evidence that Penn would not have participated in the bidding without the breakup fee, which Harrah’s would have had to cover as the winning bidder.

Walrath agreed, noting that the stalking horse bid was signed at the moment of auction and was not used to market the Thistledown assets, as is normally case in a bankruptcy sale.

“We can all try to guess what would have happened without it,” said Walrath, whose approval of the Remington Park sale came without any discussion of the bidding procedures.

“A five-minute auction?” Walrath asked when handed a transcript of the Remington Park sale meeting.

“It was not frothy bidding, as they say, your honor,” Rosen responded, noting that a backup bidder had no interest in participating in the final auction.

In addition to the sales of Thistledown and Remington Park, Walrath also has approved the $8 million sale of about 490 acres of undeveloped property owned by Magna in Ocala, Fla., where the company had once hoped to build a race track or a horse training facility.

On Tuesday, Walrath agreed to schedule a hearing on bid procedures for the sale of Lone Star Park, which includes a stalking horse bid of $27 million submitted by Global Gaming, the purchaser of Remington Park. The proposed sale procedures call for qualified bids to be submitted by Oct. 5, with an auction two days later and a court hearing on Oct. 14.