|Magna Entertainment Corp. Signs Agreement to Acquire Lone Star Park
Magna Entertainment Corp. ("MEC") (NASDAQ: MIEC, TSE: MIE.A, MEH) has entered into an agreement with Lone Star Race Park, Ltd. and LSJC Development Corporation to acquire Lone Star Park at Grand Prairie for a purchase price to be satisfied by the payment of $80 million in cash and the assumption of certain liabilities, including a capital lease obligation of approximately $19 million. The transaction, subject to the receipt of regulatory approvals and the satisfaction of certain conditions, is expected to close in the second quarter of 2002.
"This is a great moment for the future of Lone Star Park at Grand Prairie and horse racing in Texas," said Lone Star Park Chairman Bob Kaminski. "Lone Star Park has had unprecedented success in its short history and now the baton is being passed to Magna Entertainment Corp., a financially strong and committed ownership group. Lone Star Park will be very well positioned for the future."
Lone Star Park, established in 1996, is one of the most modern racetracks and pari-mutuel wagering facilities in the United States. More than six million people have passed through the turnstiles and wagered in excess of $1.2 billion since live racing began on April 17, 1997 - nearly five years ago.
Lone Star Park annually conducts a live Thoroughbred meeting from April to July (70 dates in 2002 from April 4-July 14) and a live American Quarter Horse meeting, billed as "The Fall Meeting of Champions," from October to November (33 dates in 2002 from Oct. 4-Nov. 30) - dates that complement MEC's current racing season by adding live racing dates at a premier racetrack in the last three quarters of the company's financial year. Meanwhile, simulcast wagering is available seven days a week in a state-of-the-art facility, the Post Time Pavilion, located adjacent to the Grandstand.
"The acquisition of Lone Star Park at Grand Prairie represents another step in MEC's program of expanding its racing and wagering operations through the ownership of the country's premier racetrack properties," said Frank Stronach, Chairman of MEC. "We are delighted to welcome the management and staff of Lone Star Park to the MEC family and we are committed to maintaining excellent relations with the City of Grand Prairie."
Existing management at Lone Star Park will remain in place, according to Kaminski.
"There will be no change in current management," Kaminski said. "For the people that regularly interface with Lone Star Park, they should see no difference. They are going to see the same people and management style that has been our hallmark the past five years. MEC and the management at Lone Star Park will remain committed to customer service and first class horse racing."
According to the definitive agreement, MEC would acquire the racing assets of Lone Star Race Park, Ltd., the partnership group who developed and operates Lone Star Park. The partnership would retain certain non-racing assets.
MEC is the leading owner and operator of Thoroughbred racetracks in the United States, based on revenue, and a leading supplier, via simulcasting, of live racing content to the growing inter-track, off-track and account wagering markets. Currently, MEC operates 10 racetracks as well as the simulcast wagering venues at those racetracks. In addition, MEC operates off-track betting (OTB) facilities and a national account wagering business called XpressBet™.
MEC's parent company, Magna International Inc. of Ontario, Canada, is one of the most diversified automotive parts suppliers in the world. In 1999, Magna International Inc., entered into a series of transactions in order to separate its non-automotive businesses.
Stronach, Founder and Chairman of Magna International Inc. and MEC, is one of the world's most prominent horsemen with active racing stables in the U.S. and Canada. The 69-year-old native of Weiz, Austria, has campaigned Triple Crown race winners Red Bullet (2000 Preakness Stakes) and Touch Gold (1997 Belmont Stakes), as well as Breeders' Cup race winners Awesome Again (1998 Classic), Macho Uno (2000 Juvenile) and Perfect Sting (2000 Filly & Mare Turf).
After five seasons of unprecedented success and quickly establishing itself as one of North America's leaders in average daily on-track attendance (8,892 patrons daily during the 2001 Thoroughbred season) and handle ($1.2 million wagered daily on live racing and simulcasts), Lone Star Park was named a conditional site for the Breeders' Cup World Thoroughbred Championships in 2005.
"Lone Star Park is an excellent facility in a first-class community that is well supported by Thoroughbred and American Quarter Horse interests in the state," said Jim McAlpine, President and CEO of MEC. "We look forward to working with these groups in the years ahead to continue the growth of Thoroughbred and American Quarter Horse racing in the State of Texas.
"The ownership of Lone Star Park will allow MEC to provide additional quality racing for its simulcast, television and account wagering operations. MEC is also enthusiastic about having Lone Star Park named as the site of the 2005 Breeders' Cup World Thoroughbred Championships. This premier racing event will create tremendous excitement for Texas Thoroughbred racing."
Once the transaction in completed, Kaminski will step down as Chairman of Lone Star Park and act as a consultant to MEC on issues involving Texas horse racing and other national initiatives.
"I'll continue to interface with the City of Grand Prairie and be involved in certain legislative issues impacting the industry," Kaminski said. "Other than that, racing at Lone Star Park in 2002 should be no different than it was in the past. These are exciting times for Lone Star Park and Texas horse racing."
"It's been such a great partnership over the last five years and I'm very pleased that MEC will retain Lone Star Park's excellent management staff," said Grand Prairie Mayor Charles England. "With the addition of MEC, they should be able to keep the momentum going forward. You can't help but get excited about the prospects of Lone Star Park after meeting Frank Stronach and other MEC management. Like the City of Grand Prairie, they are committed to horse racing."
The City of Grand Prairie and Grand Prairie Sports Facilities Development Corp., a seven-member board which oversees the use of the city tax proceeds that financed up to $65 million of the Lone Star Park project, is the landlord of Lone Star Park. In turn, they lease the racetrack to Lone Star Race Park, Ltd., who operates the facility.