EXHIBIT 99.2
Magna Entertainment Corp. (MEC)
Hypothetical Liquidation Analysis
USD 000’s
This is a hypothetical liquidation analysis for each MEC operating business unit, including Corporate. The analysis is a based on the Company’s January 31, 2010 unaudited balance sheet. The assumed asset recovery levels utilized in this analysis represents management’s best estimate based on information currently available, including real estate appraisals and results from the marketing and sales process undertaken by MEC’s Financial Advisor Miller Buckfire.
The hypothetical liquidation analysis relies on certain projected future events and necessarily relies on certain estimates and assumptions in order to arrive at a hypothetical liquidation value for Debtors and their subsidiaries. Although developed and considered reasonable by Management, the estimates and assumptions are inherently subject to significant business, economic, competitive uncertainties and contingencies beyond the control of the Company and Management. The assumptions used in this analysis are, therefore, subject to material change.
Accordingly, there can be no assurances that the values reflected in the liquidation analysis would be realized if the Company was, in fact, to undergo such a liquidation, and actual results could vary materially from those shown here. Furthermore, the Company cannot judge with any degree of certainty the impact of a forced liquidation on the market value of individual assets or the collectibility of accounts receivable.
Further, there can be no assurance that in a liquidation scenario, the Company can raise the working capital under any credit agreement in order to fund the liquidation process. As a result, the liquidation recovery may be even further diminished.
This hypothetical liquidation analysis is subject to change considering future liabilities and prospects for the liquidation of assets and collections of accounts receivable balances.
NOTES ON LIQUIDATION ANALYSIS
| (a) | The analysis assumes that it will take 60 days to liquidate the assets. |
| (b) | Total net assets include a projected $23 million in cash and cash equivalents. Excludes cash balances from MEC non-debtor European entities as it is assumed that cash on hand will be required to satisfy a wind-down of the European entities. |
| (c) | Restricted cash relates primarily to cash held in trust on behalf of the Horsemen, account wagering customers, and the Remington Park sale proceeds. Therefore, it is assumed that restricted cash relating to horsemen and accounting wagering customers would have no recovery value for parties not subject to the various trust agreements. The estimated liquidation proceeds relate to recovering cash deposits for utility providers, and the net proceeds from the sale of Remington Park. |
| (d) | The account receivable recovery ranges are applied to receivable balances and does not include intercompany receivables. |
| (e) | Prepaid assets are assumed to have limited recoverability due to the nature of the assets as most are either prepaid insurance, licenses or other miscellaneous items. |
| (f) | Inventory consists of F&B, print shop, gift shop inventory at the racetracks as well as spare parts and equipment inventory for AmTote. It has been assumed that F&B inventory, particularly perishable items, will have a very limited recovery value. |
Magna Entertainment Corp. (MEC)
Hypothetical Liquidation Analysis
USD 000’s
| (g) | A federal income tax refund of approximately of $2.4 million is estimated to be collected relating primarily to loss carrybacks of MEC and its subsidiaries for the periods 2004 to 2007. |
| (h) | Estimated liquidation proceeds assume that the land is sold for development with no recoverable value for buildings. |
| (i) | Equipment includes machinery and equipment, furniture, computer hardware, as well as the account wagering IT infrastructure and intellectual property for XpressBet. |
| (j) | Other assets include cash collateral for surety bonds, long-term deposits, investments in joint ventures, an estimated recovery related to gaming right potential at Thistledown and other various items. |
| (k) | Asset sales under contract relates to Lone Star Park, Fex Straw Manufacturing and the Meadows holdback note. Assumes that regulatory approval will be obtained for the asset sales, and that any operating losses incurred between the liquidation date and closing will be deducted from the sale proceeds. With respect to Thistledown, assumes termination of existing purchase agreement pursuant to Purchaser termination rights. |
| (l) | Total payroll expenses includes base compensation, employer paid benefits and taxes. Ongoing payroll expenses cover key management employees and the accounting, finance and information systems departments of each business unit and the corporate office. No retention bonuses have been assumed in the analysis. |
Payroll expenses related to the WARN Act include base compensation, benefits and taxes for all terminated employees for a period of 60 days. Under the WARN Act, 60 days notice must be provided to employees (hourly and salaried workers), and applies if the employer has more than 100 employees. The WARN Act does not cover those employees who have worked less than 6 months in the last 12 months and those who work less than 20 hours per week. The WARN Act provisions would be applicable to many of MEC’s business units.
| (m) | Overhead expenses includes all operating costs over the liquidation period including, but not limited to utilities, communication, occupancy, travel and general and administrative. |
| (n) | Total professional fees includes fees for financial advisors and attorneys over the estimated 60 day liquidation period which is currently estimated at $2.5 million. |
| (o) | Assumes that property tax and insurance costs will not payable during the 60 day liquation process (i.e., assumes that lump sum annual payments are made prior to the liquidation period). |
| (p) | For the purpose of this analysis, assumes that the DIP Loan is fully drawn. |
Magna Entertainment Corp. (MEC)
Hypothetical Liquidation Analysis
USD 000’s
| Description | Jan 2010 | Estimated recovery % | Estimated Liquidation Proceeds |
| | Assets (Unaudited) | Low | High | Low | High |
| Asset categories | | | | | |
| Cash | 22,966 | 100% | 100% | 22,966 | 22,966 |
| Restricted Cash (1) | 59,165 | 87% | 87% | 51,279 | 51,279 |
| Accounts receivable | 44,700 | 30% | 60% | 13,410 | 26,820 |
| Prepaids | 8,724 | 0% | 5% | - | 436 |
| Inventory | 5,671 | 9% | 22% | 489 | 1,258 |
| Income tax receivable | 2,442 | 100% | 100% | 2,442 | 2,442 |
| Land (2) | 237,657 | 64% | 132% | 150,965 | 313,000 |
| Building and fixtures (2) | 342,188 | 0% | 0% | - | - |
| Equipment and other | 84,895 | 28% | 63% | 23,761 | 53,615 |
| Other assets | 57,616 | 10% | 81% | 6,045 | 46,518 |
| Asset sales under contract | | | | 35,500 | 61,928 |
| | 866,024 | | | 306,857 | 580,261 |
| Less: Wind down expenses | | | | | |
| Professional fees | | | | 2,500 | 2,500 |
| Payroll (WARN Act) (3) | | | | 11,978 | 11,978 |
| Administrative payroll | | | | 766 | 766 |
| Utilities | | | | 164 | 640 |
| G&A, rent, communication, etc | | | | 616 | 616 |
| Other | | | | - | - |
| Total Wind-down Expenses | | | | 16,025 | 16,500 |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Secured Creditors | 290,832 | 563,762 |
| | | | | |
| Secured Debt | Principal | Accrued Interest | Letters of credit and commitment fees | | |
| Wells Fargo (Term loan and revolver) | 65,045 | 17 | - | 65,062 | 65,062 |
| PNC | 12,926 | 42 | - | 12,968 | 12,968 |
| BMO | 37,991 | - | 1,937 | 39,928 | 39,928 |
| MID - Gulfstream Park | 169,172 | 18,230 | | 187,402 | 187,402 |
| MID - Remington Park | 22,762 | 2,238 | | 25,000 | 25,000 |
| MID - Bridge Loan | 125,000 | 15,632 | | 140,632 | 140,632 |
| MID - 2008 New Loan - Tranche 1 | 51,200 | 6,802 | 19 | 58,021 | 58,021 |
| MID - 2008 New Loan - Tranche 2 | 789 | 198 | 1 | 988 | 988 |
| MID - DIP Loan (4) | 33,000 | - | - | 33,000 | 33,000 |
| Total Secured Debt | 517,885 | 43,159 | 1,957 | 563,001 | 563,001 |
| Net Estimated Liquidation Proceeds less Secured Debt | | | (272,169) | 761 |
Footnotes:
| (1) | Restricted cash relates to cash held in trust on behalf of the Horsemen, account wagering customers, and the Remington Park sale proceeds. Therefore, it is assumed that restricted cash relating to horsemen and accounting wagering customers would have no recovery value for parties not subject to the various trust agreements. The estimated liquidation proceeds relate to recovering cash deposits for utility providers, and the net proceeds from the sale of Remington Park. |
| (2) | Estimated liquidation proceeds assume that the land is sold for development with no recoverable value for buildings. |
| (3) | Under the WARN Act, 60 days notice must be provided to employees (hourly and salaried workers), and applies if the employer has more than 100 employees. The WARN Act does not cover those employees who have worked less than 6 months in the last 12 months and those who work less than 20 hours per week. The WARN Act provisions would be applicable to many of MEC's business units. |
| (4) | Assumes that the DIP Loan is fully drawn. |
Santa Anita Park
Hypothetical Liquidation Analysis
USD 000’s
| Description | Jan 2010 | Estimated recovery % | Estimated Liquidation Proceeds |
| | Assets (Unaudited) | Low | High | Low | High |
| | | | | | |
| Asset categories | | | | | |
| Cash | 4,984 | 100% | 100% | 4,984 | 4,984 |
| Restricted Cash (1) | 3,285 | 0% | 0% | - | - |
| Accounts receivable | 14,060 | 30% | 60% | 4,218 | 8,436 |
| Prepaids (2) | 1,247 | 0% | 5% | - | 62 |
| Inventory (3) | 837 | 5% | 15% | 42 | 126 |
| Income tax receivable (4) | - | 0% | 0% | - | - |
| Land (5) | 73,739 | 100% | 200% | 73,739 | 147,478 |
| Buildings (5) | 69,632 | 0% | 0% | - | - |
| Equipment and other | 4,192 | 10% | 25% | 419 | 1,048 |
| Other assets (6) | 9,635 | 0% | 0% | - | - |
| | | | | | |
| | 181,611 | | | 83,402 | 162,134 |
| | | | | | |
| Less: Wind down expenses | | | | | |
| Professional fees (7) | | | | - | - |
| Payroll (WARN Act) (8) | | | | 2,774 | 2,774 |
| Administrative payroll | | | | 84 | 84 |
| Utilities | | | | 30 | 118 |
| G&A, rent, communication, etc | | | | 30 | 30 |
| Other | | | | | |
| Total Wind-down Expenses | | | | 2,918 | 3,006 |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Secured Creditors | 80,484 | 159,128 |
| | | | | | |
| Secured Debt | Total Debt | | | | |
| Wells Fargo (Term loan and revolver) | 65,062 | | | 65,062 | 65,062 |
| BMO | 39,928 | | | 15,422 | 39,928 |
| MID - Bridge Loan | 140,632 | | | - | 54,138 |
| MID - 2008 New Loan - Tranche 1 | 58,021 | | | - | - |
| MID - 2008 New Loan - Tranche 2 | 988 | | | - | - |
| MID - DIP Loan (9) | 33,000 | | | - | - |
| | 337,631 | | | 80,484 | 159,128 |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Unsecured Creditors | - | - |
Footnotes:
| (1) | Restricted cash relates primarily to cash held in trust on behalf of the Horsemen and other parties. Therefore, it is assumed that restricted cash would have no recovery value for parties not subject to the trust agreement. |
| (2) | Prepaid assets are assumed to have limited recoverability due to the nature of the assets as most are either prepaid insurance or other miscellaneous items. |
| (3) | Inventory consists of print shop, gift shop and F&B. It has been assumed that F&B inventory, particularly perishable items will have limited recovery value. |
| (4) | MEC files a consolidated income tax return and as a result there are no income taxes recoverable by the business units. |
| (5) | Estimated liquidation proceeds assume that the land is sold for development with no recoverable value for buildings. |
| (6) | Other assets relates to costs incurred re: the Caruso JV entitlement process. Assumed to have no recoverable value. |
| (7) | Professional fees are included in the MEC Corporate estimates. |
| (8) | Under the WARN Act, 60 days notice must be provided to employees (hourly and salaried workers), and applies if the employer has more than 100 employees. The WARN Act does not cover those employees who have worked less than 6 months in the last 12 months and those who work less than 20 hours per week. |
| (9) | Assumes that the DIP Loan is fully drawn. |
| (10) | The analysis assumes that it will take 60 days to liquidate the assets |
Golden Gate Fields
Hypothetical Liquidation Analysis
USD 000’s
| Description | Jan 2010 | Estimated recovery % | Estimated Liquidation Proceeds |
| | Assets (Unaudited) | Low | High | Low | High |
| | | | | | |
| Asset categories | | | | | |
| Cash | 2,688 | 100% | 100% | 2,688 | 2,688 |
| Restricted Cash (1) | 1,050 | 0% | 0% | - | - |
| Accounts receivable | 7,098 | 30% | 60% | 2,129 | 4,259 |
| Prepaids (2) | 532 | 0% | 5% | - | 27 |
| Inventory (3) | 116 | 2% | 5% | 2 | 6 |
| Income tax receivable (4) | - | 0% | 0% | - | - |
| Land (5) | 57,192 | 40% | 80% | 22,877 | 45,754 |
| Buildings (5) | 16,893 | 0% | 0% | - | - |
| Equipment and other | 1,369 | 10% | 25% | 137 | 342 |
| Other assets (6) | 8,500 | 0% | 0% | - | - |
| | | | | | |
| | 95,438 | | | 27,833 | 53,075 |
| | | | | | |
| Less: Wind down expenses | | | | | |
| Professional fees (7) | | | | - | - |
| Payroll (WARN Act) (8) | | | | 2,308 | 2,308 |
| Administrative payroll | | | | 72 | 72 |
| Utilities | | | | 22 | 90 |
| G&A, rent, communication, etc | | | | 40 | 40 |
| Other | | | | | |
| Total Wind-down Expenses | | | | 2,442 | 2,510 |
| Net Estimated Liquidation Proceeds Available to Pay Secured Creditors | 25,391 | 50,565 |
| | | | | | |
| Secured Debt | Total Debt | | | | |
| BMO | 39,928 | | | 24,506 | - |
| MID - Bridge Loan | 140,632 | | | 885 | 50,565 |
| MID - 2008 New Loan - Tranche 1 | 58,021 | | | | |
| MID - 2008 New Loan - Tranche 2 | 988 | | | | |
| MID - DIP Loan (9) | 33,000 | | | | |
| | 272,569 | | | | |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Unsecured Creditors | - | - |
| (1) | Restricted cash relates primarily to cash held in trust on behalf of the Horsemen and other parties. Therefore, it is assumed that restricted cash would have no recovery value for parties not subject to the trust agreement. |
| (2) | Prepaid assets are assumed to have limited recoverability due to the nature of the assets as most are either prepaid insurance or other miscellaneous items. |
| (3) | Inventory consists of F&B items. It has been assumed that F&B inventory, particularly perishable items will have limited recovery value. |
| (4) | MEC files a consolidated income tax return and as a result there are no income taxes recoverable by the business units. |
| (5) | Estimated liquidation proceeds assume that the land is sold for development with no recoverable value for buildings. |
| (6) | Relates to an investment in a related company which is controlled by MEC. Assumes no recoverable value. |
| (7) | Professional fees are included in the MEC Corporate estimates. |
| (8) | Under the WARN Act, 60 days notice must be provided to employees (hourly and salaried workers), and applies if the employer has more than 100 employees. The WARN Act does not cover those employees who have worked less than 6 months in the last 12 months and those who work less than 20 hours per week. |
(9) | Assumes that the DIP Loan is fully drawn. The analysis assumes that it will take 60 days to liquidate the assets |
Gulfstream Park
Hypothetical Liquidation Analysis
USD 000’s
| Description | Jan 2010 | Estimated recovery % | Estimated Liquidation Proceeds |
| | Assets (Unaudited) | Low | High | Low | High |
| | | | | | |
| Asset categories | | | | | |
| Cash | 7,015 | 100% | 100% | 7,015 | 7,015 |
| Restricted Cash (1) | 474 | 0% | 0% | - | - |
| Accounts receivable | 12,841 | 30% | 60% | 3,852 | 7,705 |
| Prepaids (2) | 3,379 | 0% | 5% | - | 169 |
| Inventory | 289 | 5% | 15% | 14 | 43 |
| Income tax receivable (3) | - | 0% | 0% | - | - |
| Land (4) | 52,381 | 75% | 150% | 39,286 | 78,572 |
| Buildings (4) | 150,910 | 0% | 0% | - | - |
| Equipment and other | 32,781 | 10% | 25% | 3,278 | 8,195 |
| Other assets (5) | 27,882 | 0% | 100% | - | 27,882 |
| | | | | | |
| | 287,952 | | | 53,446 | 129,581 |
| | | | | | |
| Less: Wind down expenses | | | | | |
| Professional fees (6) | | | | - | - |
| Payroll (WARN Act) (7) | | | | 1,746 | 1,746 |
| Administrative payroll | | | | 78 | 78 |
| Utilities | | | | 32 | 128 |
| G&A, rent, communication, etc | | | | 60 | 60 |
| Other | | | | | |
| Total Wind-down Expenses | | | | 1,916 | 2,012 |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Secured Creditors | 51,530 | 127,569 |
| | | | | | |
| Secured Debt | Total Debt | | | | |
| MID – Gulfstream Park | 187,402 | | | 51,530 | 127,569 |
| MID – Remington Park | 25,000 | | | | |
| MID - DIP Loan (8) | 33,000 | | | | |
| | 245,402 | | | 51,530 | 127,569 |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Unsecured Creditors | - | - |
Footnotes:
| (1) | Restricted cash relates primarily to cash held in trust on behalf of the Horsemen. Therefore, it is assumed that restricted cash would have no recovery value for parties not subject to the trust agreement. |
| (2) | The majority ($2.7M) of the prepaid balance relates to prepaid licenses which are assumed to have no recoverable value. |
| (3) | MEC files a consolidated income tax return and as a result there are no income taxes recoverable by the business units. |
| (4) | Estimated liquidation proceeds assume that the land is sold for development with no recoverable value for buildings Land value includes an assumed recoverable value related to the land lease with the VGP development. |
| (5) | Relates to the investment in the Village at Gulfstream Park JV development with Forest City. |
| (6) | Professional fees are included in the MEC Corporate estimates. |
| (7) | Under the WARN Act, 60 days notice must be provided to employees (hourly and salaried workers), and applies if the employer has more than 100 employees. The WARN Act does not cover those employees who have worked less than 6 months in the last 12 months and those who work less than 20 hours per week. |
(8) | Assumes that the DIP Loan is fully drawn. |
| (9) | The analysis assumes that it will take 60 days to liquidate the assets. |
Palm Meadows
Hypothetical Liquidation Analysis
USD 000’s
| Description | Jan 2010 | Estimated recovery % | Estimated Liquidation Proceeds |
| | Assets (Unaudited) | Low | High | Low | High |
| | | | | | |
| Asset categories | | | | | |
| Cash | 194 | 100% | 100% | 194 | 194 |
| Restricted Cash | | 0% | 0% | - | - |
| Accounts receivable | 926 | 30% | 60% | 278 | 556 |
| Prepaids | | 0% | 5% | - | - |
| Inventory | 3 | 5% | 15% | 0 | 0 |
| Income tax receivable (1) | - | 0% | 0% | - | - |
| Land (2) | 8,023 | 50% | 100% | 4,012 | 8,023 |
| Buildings (2) | 51,135 | 0% | 0% | - | - |
| Equipment and other | 16,683 | 10% | 25% | 1,668 | 4,171 |
| Other assets | | 0% | 0% | - | - |
| | | | | | |
| | 76,964 | | | 6,152 | 12,944 |
| | | | | | |
| Less: Wind down expenses | | | | | |
| Professional fees (3) | | | | - | - |
| Payroll (WARN Act) (4) | | | | - | - |
| Administrative payroll (4) | | | | - | - |
| Utilities | | | | 3 | 11 |
| G&A, rent, communication, etc | | | | 10 | 10 |
| Other | | | | | |
| Total Wind-down Expenses | | | | 13 | 21 |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Secured Creditors | 6,139 | 12,923 |
| | | | | | |
| Secured Debt | Total Debt | | | | |
| MID – Gulfstream Park | 187,402 | | | 6,139 | 12,923 |
| MID – Remington Park | 25,000 | | | | |
| MID - DIP Loan (5) | 33,000 | | | | |
| | 245,402 | | | 6,139 | 12,923 |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Unsecured Creditors | - | - |
Footnotes:
| (1) | MEC files a consolidated income tax return and as a result there are no income taxes recoverable by the business units. |
| (2) | Estimated liquidation proceeds assume that the land is sold for development with no recoverable value for buildings. |
| (3) | Professional fees are included in the MEC Corporate estimates. |
| (4) | Gulfstream Park performs the administrative functions on behalf of Palm Meadows. WARN act provisions are not expected to be applicable. |
| (5) | Assumes that the DIP Loan is fully drawn. |
| (6) | The analysis assumes that it will take 60 days to liquidate the assets |
XpressBet
Hypothetical Liquidation Analysis
USD 000’s
| Description | Jan 2010 | Estimated recovery % | Estimated Liquidation Proceeds |
| | Assets (Unaudited) | Low | High | Low | High |
| | | | | | |
| Asset categories | | | | | |
| Cash | 1,664 | 100% | 100% | 1,664 | 1,664 |
| Restricted Cash (1) | 2,785 | 0% | 0% | - | - |
| Accounts receivable | 542 | 30% | 60% | 163 | 325 |
| Prepaids | 512 | 0% | 5% | - | 26 |
| Inventory | | 0% | 0% | - | - |
| Income tax receivable (2) | | 0% | 0% | - | - |
| Land | - | 0% | 0% | - | - |
| Buildings | - | 0% | 0% | - | - |
| Equipment and other | 3,140 | 500% | 1000% | 15,700 | 31,400 |
| Other assets | | 0% | 0% | - | - |
| | | | | | |
| | 8,643 | | | 17,527 | 33,415 |
| | | | | | |
| Less: Wind down expenses | | | | | |
| Professional fees (3) | | | | - | - |
| Payroll (WARN Act) (4) | | | | - | - |
| Administrative payroll | | | | 70 | 70 |
| Utilities | | | | 2 | 4 |
| G&A, rent, communication, etc | | | | 50 | 50 |
| Other | | | | | |
| Total Wind-down Expenses | | | | 124 | 124 |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Secured Creditors | 17,405 | 33,291 |
Footnotes:
| (1) | Restricted cash relates primarily to cash held in trust on behalf of the account wagering customers. Therefore, it is assumed that restricted cash would have no recovery value for parties not subject to the trust agreement. |
| (2) | MEC files a consolidated income tax return and as a result there are no income taxes recoverable by the business units. |
| (3) | Professional fees are included in the MEC Corporate estimates. |
| (4) | WARN Act provisions are not expected to be applicable. |
| (5) | The analysis assumes that it will take 60 days to liquidate the assets. |
| (6) | XpressBet is a non-debtor entity. Accordingly, MEC, as the owner of XpressBet, would be entitled to the liquidation proceeds, if any, from XpressBet, which would then be used to repay MID secured debt. |
AmTote International
Hypothetical Liquidation Analysis
USD 000’s
| Description | Jan 2010 | Estimated recovery % | Estimated Liquidation Proceeds |
| | Assets (Unaudited) | Low | High | Low | High |
| | | | | | |
| Asset categories | | | | | |
| Cash | 3,032 | 100% | 100% | 3,032 | 3,032 |
| Restricted Cash | | 0% | 0% | - | - |
| Accounts receivable | 4,169 | 30% | 60% | 1,251 | 2,501 |
| Prepaids | 895 | 0% | 5% | - | 45 |
| Inventory (1) | 4,186 | 10% | 25% | 419 | 1,047 |
| Income tax receivable (2) | 123 | 100% | 100% | 123 | 123 |
| Land | - | 0% | 0% | - | - |
| Buildings | - | 0% | 0% | - | - |
| Equipment and other (3) | 20,636 | 10% | 35% | 2,064 | 7,223 |
| Other assets | 74 | 0% | 0% | - | - |
| | | | | | |
| | 33,115 | | | 6,888 | 13,970 |
| | | | | | |
| Less: Wind down expenses | | | | | |
| Professional fees (4) | | | | - | - |
| Payroll (WARN Act) (5) | | | | 1,350 | 1,350 |
| Administrative payroll | | | | 80 | 80 |
| Utilities | | | | 15 | 46 |
| G&A, rent, communication, etc | | | | 156 | 156 |
| Other | | | | | |
| Total Wind-down Expenses | | | | 1,601 | 1,632 |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Secured Creditors | 5,287 | 12,338 |
| | | | | | |
| Secured Debt | Total Debt | | | | |
| MID - DIP Loan (6) | 33,000 | | | 5,287 | 12,338 |
| | 33,000 | | | 5,287 | 12,338 |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Unsecured Creditors | - | - |
Footnotes:
| (1) | Inventory represents primarily parts inventory (some paper inventory in the US). Given the specific nature of the inventory, it is assumed to have a limited recovery. |
| (2) | Income tax recoverable relates to a loss carryback to 2006 |
| (3) | Fixed assets relates to terminals, servers, display boards, computer hardware and software. |
| (4) | Professional fees are included in the MEC Corporate estimates. |
| (5) | Under the WARN Act, 60 days notice must be provided to employees (hourly and salaried workers), and applies if the employer has more than 100 employees. The WARN Act does not cover those employees who have worked less than 6 months in the last 12 months and those who work less than 20 hours per week. |
| (6) | Assumes that the DIP Loan is fully drawn. |
| (7) | The analysis assumes that it will take 60 days to liquidate the assets. |
Portland Meadows
Hypothetical Liquidation Analysis
USD 000’s
| Description | Jan 2010 | Estimated recovery % | Estimated Liquidation Proceeds |
| | Assets (Unaudited) | Low | High | Low | High |
| | | | | | |
| Asset categories | | | | | |
| Cash | 778 | 100% | 100% | 778 | 778 |
| Restricted Cash (1) | 904 | 0% | 0% | - | - |
| Accounts receivable | 1,062 | 30% | 60% | 319 | 637 |
| Prepaids | 169 | 0% | 5% | - | 8 |
| Inventory | 20 | 5% | 15% | 1 | 3 |
| Income tax receivable (2) | | 0% | 0% | - | - |
| Land | 5,194 | 10% | 40% | 519 | 2,078 |
| Buildings | - | 0% | 0% | - | - |
| Equipment and other | 114 | 10% | 25% | 11 | 29 |
| Other assets | | 0% | 0% | - | - |
| | | | | | |
| | 8,241 | | | 1,628 | 3,533 |
| | | | | | |
| Less: Wind down expenses | | | | | |
| Professional fees (3) | | | | - | - |
| Payroll (WARN Act) (4) | | | | 450 | 450 |
| Administrative payroll | | | | 54 | 54 |
| Utilities | | | | 4 | 16 |
| G&A, rent, communication, etc | | | | 30 | 30 |
| Other | | | | | |
| Total Wind-down Expenses | | | | 538 | 550 |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Secured Creditors (6) | 1,090 | 2,983 |
Footnotes:
| (1) | Restricted cash relates primarily to cash held in trust on behalf of the Horsemen. Therefore, it is assumed that restricted cash would have no recovery value for parties not subject to the trust agreement. |
| (2) | MEC files a consolidated income tax return and as a result there are no income taxes recoverable by the business units. |
| (3) | Professional fees are included in the MEC Corporate estimates. |
| (4) | Under the WARN Act, 60 days notice must be provided to employees (hourly and salaried workers), and applies if the employer has more than 100 employees. The WARN Act does not cover those employees who have worked less than 6 months in the last 12 months and those who work less than 20 hours per week. |
| (5) | The analysis assumes that it will take 60 days to liquidate the assets. |
| (6) | Portland Meadows is a non-debtor entity. Accordingly, MEC, as the owner of Portland Meadows, would be entitled to the liquidation proceeds, if any, from Portland Meadows, which would then be used to repay MID secured debt. |
MEC Corporate
Hypothetical Liquidation Analysis
USD 000’s
| Description | Jan 2010 | Estimated recovery % | Estimated Liquidation Proceeds |
| | Assets (Unaudited) | Low | High | Low | High |
| | | | | | |
| Asset categories | | | | | |
| Cash | 1,083 | 100% | 100% | 1,083 | 1,083 |
| Restricted Cash (1) | 51,279 | 100% | 100% | 51,279 | 51,279 |
| Accounts receivable | 486 | 30% | 60% | 146 | 292 |
| Prepaids | 783 | 0% | 5% | - | 39 |
| Inventory | | 0% | 0% | - | - |
| Income tax receivable (2) | 658 | 100% | 100% | 658 | 658 |
| Land | - | 0% | 0% | - | - |
| Buildings | - | 0% | 0% | - | - |
| Equipment and other (3) | 1,435 | 2% | 5% | 29 | 72 |
| Other assets (4) | 11,514 | 53% | 75% | 6,045 | 8,636 |
| | | | | | |
| | 67,238 | | | 59,239 | 62,058 |
| | | | | | |
| Less: Wind down expenses | | | | | |
| Professional fees | | | | 2,500 | 2,500 |
| Payroll (WARN Act) (5) | | | | - | - |
| Administrative payroll (5) | | | | 188 | 188 |
| Utilities | | | | - | - |
| G&A, rent, communication, etc | | | | 50 | 50 |
| Other | | | | - | - |
| Total Wind-down Expenses | | | | 2,738 | 2,738 |
| | | |
| Net Estimated Liquidation Proceeds Available to Pay Secured Creditors | 56,501 | 59,320 |
| | | | | | |
| Secured Debt | Total Debt | | | | |
| PNC | | | | 3,298 | - |
| BMO | | | | - | - |
| MID - Gulfstream Park | | | | 129,733 | 31,911 |
| MID - Remington Park | | | | 25,000 | 25,000 |
| MID - Bridge Loan | | | | 137,911 | 23,206 |
| MID - 2008 New Loan – Tranche 1 | | | | 58,021 | 58,021 |
| MID - 2008 New Loan – Tranche 2 | | | | 988 | 988 |
| MID - DIP Loan (6) | | | | - | - |
| | | | | 354,952 | 139,125 |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Unsecured Creditors (8) | (298,451) | (79,805) |
| (1) | Restricted cash relates to cash held in a segregated account related to the Remington Park sale proceeds, and Utility deposits. Assumes that utility deposits would be recoverable, as well as the Remington proceeds. |
| (2) | MEC files a consolidated income tax return and assumes no income taxes are recoverable. |
| (3) | Approximately $1 million relates to costs incurred relating to land entitlements for Gulfstream Park land in Aventura. The value of these costs has been attributed to the land at Gulfstream Park. |
| (4) | Other assets consistent of cash collateral for surety bonds ($6.9M), cash collateral for insurance ($1.0M), and costs capitalized for certain development projects. |
| (5) | Assumes the following personnel would be required during the 60 day liquidation process: 2 legal, 2 finance, 2 Information technology WARN Act provisions are not expected to be applicable. |
| (6) | Assumes that the DIP Loan is fully drawn. |
| (7) | The analysis assumes that it will take 60 days to liquidate the assets. |
| (8) | The estimated shortfall could be reduced, in part, by the liquidation proceeds, if any, from non-debtor entities XpressBet, Portland Meadows and Fex Straw. |
Thistledown
Hypothetical Liquidation Analysis
USD 000’s
| Description | Jan 2010 | Estimated recovery % | Estimated Liquidation Proceeds |
| | Assets (Unaudited) | Low | High | Low | High |
| | | | | | |
| Asset categories | | | | | |
| Cash | 1,058 | 100% | 100% | 1,058 | 1,058 |
| Restricted Cash (1) | 97 | 0% | 0% | - | - |
| Accounts receivable (2) | 915 | 30% | 60% | 275 | 549 |
| Prepaids | | 0% | 5% | - | - |
| Inventory | 53 | 5% | 15% | 3 | 8 |
| Income tax receivable (3) | | | | - | - |
| Land (4) | 1,002 | 50% | 100% | 501 | 1,002 |
| Buildings (4) | 3,934 | 0% | 0% | - | - |
| Equipment and other | 948 | 10% | 25% | 95 | 237 |
| Other assets (5) | 1 | 0% | 1000000% | - | 10,000 |
| | | | | | |
| | 8,008 | | | 1,931 | 12,854 |
| | | | | | |
| Less: Wind down expenses | | | | | |
| Professional fees (5) | | | | - | - |
| Payroll (WARN Act) (6) | | | | - | - |
| Administrative payroll | | | | 54 | 54 |
| Utilities | | | | 12 | 46 |
| G&A, rent, communication, etc | | | | 30 | 30 |
| Other | | | | | |
| Total Wind-down Expenses | | | | 96 | 130 |
| | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Secured Creditors | 1,835 | 12,724 |
| | | | | | |
| Secured Debt | Total Debt | | | | |
| MID - Bridge Loan | 140,632 | | | 1,835 | 12,724 |
| MID - 2008 New Loan - Tranche 1 | 58,021 | | | | |
| MID - 2008 New Loan - Tranche 2 | 988 | | | | |
| MID - DIP Loan (9) | 33,000 | | | | |
| | 232,641 | | | 1,835 | 12,724 |
| | | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Unsecured Creditors | - | - |
| (1) | Restricted cash relates primarily to cash held in trust on behalf of the Horsemen. Therefore, it is assumed that restricted cash would have no recovery value for parties not subject to the trust agreement. |
| (2) | AR excludes a tax abatement credit of $176k as it is assumed that no value will be attributed to this asset. |
| (3) | MEC files a consolidated income tax return and as a result there are no income taxes recoverable by the business units. |
| (4) | Estimated liquidation proceeds assume that the land is sold for development with no recoverable value for buildings. |
| (5) | Relates to gaming right potential. |
| (6) | Professional fees are included in the MEC Corporate estimates. |
| (7) | WARN Act provisions are not expected to be applicable. |
| (8) | Assumes termination of existing purchase agreement pursuant to Purchaser termination rights. |
(9) | Assumes that the DIP Loan is fully drawn. The analysis assumes that it will take 60 days to liquidate the assets. |
Maryland Jockey Club (Laurel, Pimlico, Bowie and OTB’s)
Hypothetical Liquidation Analysis
USD 000’s
| Description | Jan 2010 | Estimated recovery % | Estimated Liquidation Proceeds |
| | Assets (Unaudited) | Low | High | Low | High |
| | | | | | |
| Asset categories | | | | | |
| Cash | 470 | 100% | 100% | 470 | 470 |
| Restricted Cash (1) | (709) | 0% | 0% | - | - |
| Accounts receivable (2) | 2,601 | 30% | 60% | 780 | 1,561 |
| Prepaids | 1,207 | 0% | 5% | - | 60 |
| Inventory | 167 | 5% | 15% | 8 | 25 |
| Income tax receivable (3) | 1,661 | 100% | 100% | 1,661 | 1,661 |
| Land (4) | 40,126 | 25% | 75% | 10,032 | 30,095 |
| Buildings (4) | 49,684 | 0% | 0% | - | - |
| Equipment and other | 3,597 | 10% | 25% | 360 | 899 |
| Other assets (5) | 10 | 0% | 0% | - | - |
| | | | | | |
| | 98,814 | | | 13,311 | 34,771 |
| | | | | | |
| Less: Wind down expenses | | | | | |
| Professional fees (5) | | | | - | - |
| Payroll (WARN Act) (6) | | | | 3,350 | 3,350 |
| Administrative payroll | | | | 86 | 86 |
| Utilities | | | | 45 | 45 |
| G&A, rent, communication, etc | | | | 160 | 160 |
| Other | | | | | |
| Total Wind-down Expenses | | | | 3,641 | 3,776 |
| | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Secured Creditors | 9,670 | 30,995 |
| | | | | |
| Secured Debt | Total Debt | | | | |
| PNC | 12,968 | | | 9,670 | 12,968 |
| MID - DIP Loan (7) | 33,000 | | | - | - |
| | 45,968 | | | 9,670 | 12,968 |
| | | | | |
| Net Estimated Liquidation Proceeds Available to Pay Unsecured Creditors | - | 18,027 |
| (1) | Restricted cash relates primarily to cash held in trust on behalf of the Horsemen. Therefore, it is assumed that restricted cash would have no recovery value for parties not subject to the trust agreement. |
| (2) | AR excludes amounts receivable of $1.646M from Cloverleaf Enterprises which has filed for bankruptcy protection and it has been assumed that this receivable will have no recovery value. |
| (3) | MEC files a consolidated income tax return and as a result there are generally no income taxes recoverable by the business units. However, MJC has filed amended tax returns to reflect loss carrybacks (for periods prior to being included in MEC’s consolidated tax return), and a recovery is assumed in the analysis. |
| (4) | Estimated liquidation proceeds assume that the land is sold for development with no recoverable value for buildings. |
| (5) | Professional fees are included in the MEC Corporate estimates. |
| (6) | Under the WARN Act, 60 days notice must be provided to employees (hourly and salaried workers), and applies if the employer has more than 100 employees. The WARN Act does not cover those employees who have worked less than 6 months in the last 12 months and those who work less than 20 hours per week. |
| (7) | Assumes that the DIP Loan is fully drawn. |
| (8) | The analysis assumes that it will take 60 days to liquidate the assets |
Asset sales under contract
Hypothetical Liquidation Analysis
USD 000’s
| Description | Jan 2010 | Estimated recovery % | Estimated Liquidation Proceeds |
| | Assets (Unaudited) | Low | High | Low | High |
| | | | | | |
Lone Star Park (1) | | | | 35,000 | 45,953 |
| Net Estimated Liquidation Proceeds Available to Pay Secured Creditors | 35,000 | 45,953 |
| | | | | | |
| Secured Debt | Total Debt | | | | |
| MID - DIP Loan (2) | 33,000 | | | 27,713 | 20,662 |
| Net Estimated Liquidation Proceeds Available to Pay Unsecured Creditors (3) | 7,287 | 25,291 |
| | | | | | |
| | | | | | |
| | | | | | |
Fex Straw Manufacturing (1) | | | | 500 | 975 |
| Net Estimated Liquidation Proceeds Available to Pay Unsecured Creditors (4) | 500 | 975 |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Meadows holdback note | | | | - | 15,000 |
| Net Estimated Liquidation Proceeds Available to Pay Secured Creditors | - | 15,000 |
| | | | | | |
| | | | | | |
| Secured Debt | Total Debt | | | | |
| MID - Gulfstream Park | 187,402 | | | - | 15,000 |
| MID - DIP Loan (2) | 33,000 | | | - | - |
| | | 220,402 | | | - | 15,000 |
| Net Estimated Liquidation Proceeds Available to Pay Unsecured Creditors | - | - |
| (1) | “High” estimate assumes that regulatory approval will be obtained, and any operating losses incurred between the liquidation date and closing will be deducted from the sale proceeds. |
| (2) | Assumes that the DIP Loan is fully drawn. |
| (3) | Pursuant to the settlement agreement between MID and the UCC, Lone Star Park’s operational requirements are to be funded by MID and the UCC prior to the sale transaction closing. Without this funding, it is unlikely that Lone Star Park would be able to meet its financial obligations in order to get to a closing of the sale contract. In the event that Lone Star Park became insolvent, MID would have the right to foreclose on Lone Star Park such that the assumed sale transaction would not close. |
| (4) | Fex Straw is a non-debtor entity. Accordingly, MEC, as the owner of Fex Straw, would be entitled to the liquidation proceeds, if any, from Fex Straw, which would then be used to repay MID secured debt. |
