SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 15, 2002
MAGNA ENTERTAINMENT CORP.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
000-30578 98-0208374
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(Commission File Number) (I.R.S. Employer Identification No.)
337 Magna Drive, Aurora, Ontario, Canada L4G 7K1
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(Address of Principal Executive Offices) (Zip Code)
(905) 726-2462
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if changed since Last Report)
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
On July 15, 2002, the Registrant entered into agreements to form an alliance to
own and operate Pimlico Race Course, in Baltimore, Maryland, and Laurel Park, in
Laurel, Maryland, which are operated under the trade name "Maryland Jockey Club"
("MJC").
Under the agreements, the Registrant will be purchasing a 51% equity and voting
interest in The Maryland Jockey Club of Baltimore City, Inc., the owner of
Pimlico Race Course, from LUK-Flats LLC, Martin Jacobs, Karin De Francis and
Joseph De Francis. Laurel Park is owned by Laurel Racing Association Limited
Partnership ("LRALP"). Under the agreements, the Registrant will be purchasing a
51% voting interest and a 58% equity interest on a fully diluted basis in Laurel
Racing Assoc., Inc. (the general partner and manager of LRALP) from LUK-Flats
LLC and Martin Jacobs, and the entire limited partner interest in LRALP from the
Laurel Guida Group. Each of Laurel Racing Assoc., Inc., as general partner of
LRALP, and the limited partner of LRALP is entitled to 50% of the profits or
losses of LRALP, so the Registrant's acquisition will give it a 79% economic
interest in LRALP. All of these interests are being acquired for an aggregate of
approximately $50.6 million in cash, subject to normal closing adjustments, of
which approximately $49 million will be paid to LUK-Flats LLC, Martin Jacobs and
the Laurel Guida Group to acquire the entire ownership interests presently held
by them.
2
The Registrant has agreed to purchase options from Joseph and Karin De Francis
to buy the remaining equity and voting interests in MJC at any time in the
period starting 48 months after the closing and terminating 60 months after the
closing, and has granted Joseph and Karin De Francis the right to sell such
interests to the Registrant at any time during the first five years after the
closing. In exchange for its options, the Registrant has agreed to pay $9.2
million on closing to each of Joseph and Karin De Francis, and an additional
total of approximately $18.3 million on exercise of the options, subject to an
interest adjustment.
The closing of the transaction is expected to occur in the fall of 2002, subject
to regulatory approvals and legislative review.
A copy of the press release announcing the transaction is attached as Exhibit 99
to this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibits Page
Exhibit 99 Copy of Registrant's press release dated July 15, 2002. 3 - 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MAGNA ENTERTAINMENT CORP.
(Registrant)
Date: July 16, 2002 by:/s/ Gary M. Cohn
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Gary M. Cohn, Secretary