Magna judge approves sale of Lone Star Park after rescheduled auction

Judge approves sale of Lone Star Park

WILMINGTON, Del. — A subsidiary of the Chickasaw Nation of Oklahoma received court approval Wednesday to buy Magna Entertainment Corp.’s Lone Star Park horse track in Texas, albeit for $20 million more than the tribe first thought it would spend.

Delaware bankruptcy judge Mary Walrath approved the sale of Lone Star to Chickasaw subsidiary Global Gaming LSP LLC, which submitted a winning bid of $47.8 million for the pari-mutuel horse racing track in Grand Prairie, Texas.

Global Gaming thought it had submitted a winning bid of $27 million earlier this month, but Walrath rescheduled an auction after ruling that an affiliate of Penn National Gaming Inc. was wrongfully excluded from the bidding process.

According to a court filing by Magna’s committee of unsecured creditors, Penn National Gaming complied with the rules for submitting its bid but was disqualified by Magna because the deposit associated with the bid was partially refundable.

The committee said that after Penn National, a Pennsylvania-based national gambling company, clarified that it intended to bid higher once it was in an auction, the best course of action was to reschedule the auction. According to the committee, Penn National submitted an original bid of $28 million and later advised Magna it was willing to bid $40 million for the track.

Magna attorney Brian Rosen told the judge on Wednesday that last week’s rescheduled auction opened with Penn’s $40 million bid.

“There was extremely spirited bidding that went back and forth,” said Rosen, adding that the auction concluded after 43 rounds with Global Gaming’s winning bid.

Global Gaming had appealed Walrath’s decision to reopen the bidding but agreed to withdraw the appeal after winning the second auction.

“The debtors were quite heartened by that,” Rosen said.

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

The judge on Wednesday also approved bidding procedures for other Magna properties, including Santa Anita and Golden Gate Fields in California; Gulfstream Park in Florida; and Pimlico Race Course in Baltimore, home of the Preakness, the second leg of the Triple Crown.

Initial bids for Pimlico and other assets of the Maryland Jockey Club are due by Nov. 2, with a lead, or “stalking horse” bidder selected by Nov. 9. Second-round bids would be due by Dec. 4, followed by an auction on Jan. 8.

According to an order signed by Walrath on Wednesday, any party submitting a bid for the Preakness must agree in writing not to move the race outside the state of Maryland.

According to court filings, the state of Maryland contends that it has a right of first refusal to buy the Preakness Stakes from Pimlico if it is sold. According to the judge’s order, Maryland would have to give notice by Dec. 21 of its plan to assert a right of first refusal and would have to exercise that right immediately at the conclusion of the auction bidding.

Rosen said Maryland would have to beat the final bid by a certain amount and also would be responsible for a breakup fee.