Magna Entertainment Corp. chairman Frank Stronach announced yesterday that the company that owns Pimlico Race Course and Laurel Park had second-quarter losses of more than $23 million and said "drastic action" must be taken to right the company.
"We are extremely disappointed with the second quarter results," Stronach said in a prepared statement. "We recognize immediate and drastic action is required, and we have commissioned a strategic review of the company."
MEC, a unit of Magna International Inc., an auto parts maker, said it lost $23.4 million in the second quarter, or 22 cents a share. As bad as that is, it is still an improvement from the same quarter a year ago, when MEC's losses totaled $26 million, or 25 cents.
MEC said it will immediately shed several of its assets. The company will cease racing operations at its Austrian racetrack Magna Racino at the end of its 2007 meet, give up its racing license for Michigan Downs in Romulus, near Detroit, and terminate its racetrack development project in Dixon, Calif.
Magna has hired Greenbrook Capital Partners Inc., whose senior partner, Tom Hodgson, is a former CEO of MEC, to conduct the strategic review. Greenbrook expects to make its report to the MEC Board by early next month.
"The board has instructed Tom to take a comprehensive approach to his review and to develop a plan that will produce a financially healthy MEC with the staying power to execute its strategic plan," Stronach said.
Asked what yesterday's news meant in terms of Maryland, Magna vice president and Maryland Jockey Club chief executive Joe DeFrancis declined to comment until after a conference call at 9 a.m. today, in which the quarterly statement will be discussed.