Magna Files for Bankruptcy Protection

06.03.2009, Magna Entertainment Corporation has filed for bankruptcy protection in the United States and Canada because of mounting debt and interest expense.

The Canadian horse racecourse operator said on Wednesday its daily operations will not change while the company undergoes a reorganization. XpressBet, the company’s account wagering company, is not included in the Chapter 11 filing, the company said.

“Simply put, MEC has far too much debt and interest expense,” said Frank Stronach, the company’s chairman and chief executive, in a company statement. “MEC has previously pursued numerous out-of-court restructuring alternatives but has been unable to complete a comprehensive restructuring to date due, in part, to the current economic recession, severe downturn in the U.S. real estate market and global credit crisis.”

Mr. Stronach emphasized in his statement that the voluntary filing is intended to utilize the Chapter 11 process to allow the company “to operate the business uninterrupted while we implement a reorganization in a court-supervised environment.”

“We expect that all employees, customers and horsemen will continue to be paid in the normal course along with all post-petition vendor obligations,” he added.

This week Magna Entertainment found out that its Toronto Stock Exchange listing would cease on April 1 because of a continued failure to meet listing requirements.

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