Pimlico, Laurel Park parent firm struggling with debt repayment

Magna owes at least $170 million by Dec. 1, including $40 million to an unidentified Canadian chartered bank and a $130 million loan from its parent company, MI Developments Inc. The latter amount has been expanded from $80 million and includes approximately $4.5 million that Magna had already repaid in July but may draw on again.

In September 2007, Magna announced a debt elimination plan that looked to raise $600 million to $700 million from asset sales to retire its debt by the end of this year. At the time, the company said it owed a total of $650 million.

But since that announcement, the real estate market has spiraled and the company has announced the sale of just two undeveloped areas for approximately $33 million, and Great Lakes Downs in Michigan for the same $4.5 million it paid back to MID and may now redraw.

“Real estate and credit markets have continued to demonstrate weakness,” the company said in a statement, “and we do not expect that we will be able to complete asset sales at acceptable prices as quickly or for amounts as originally contemplated.”

Magna representatives did not return calls for comment.

The company’s income has slid in the last few years, and in the second quarter was $166.3 million, down $1.1 million from the same quarter a year before.

Magna said it expects to need further extensions on repayment of its debt and could require immediate investments, but said in its Oct. 15 statement that the chances of getting either are “not determinable at this time.”

Several MID shareholders in regulatory filings called the credit extensions to Magna are a danger to MID’s balance sheet.

“MEC’s situation and prospects are no longer matters on which reasonable people can disagree,” David Einhorn, president of New York-based Greenlight Capital and a 10 percent Magna shareholder wrote in one letter. “The facts are obvious and beyond dispute: MEC has utterly failed as a business enterprise.”