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Exhibit 99.1
PRIVATE & CONFIDENTIAL
EXECUTION COPY
BRIDGE LOAN TERM
SHEET
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Borrower:
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Magna Entertainment Corp.
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Guarantors:
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See Schedule A .
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Lender:
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MID Islandi sf., acting through its Zug Branch.
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Documentation:
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Loan agreement (" Bridge Loan Agreement ") to contain
standard representations, warranties, covenants, indemnities,
events of default and remedies for a transaction of this
nature.
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All dollar amounts used herein are stated in U.S. dollars. All
uses herein of the word "including" shall be deemed to mean
"including without limitation".
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Bridge Loan
Commitment:
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Not to exceed $100 million non-revolving general credit
facility (the
" Bridge Loan ") available in 3 tranches:
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1 $50 million on closing
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2 $25 million on the
first banking day on or after Oct. 15, 2005
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3 $25 million on the
first banking day on or after Jan. 15, 2006
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Tranches 2 and 3 will not be available unless (a) no
event of default (or
unmatured event of default) will have occurred and be continuing or
will
result from the making available of the tranche and (b) the
Borrower has
established to the satisfaction of the Lender, in its sole
discretion, that the
Borrower is in compliance with, can reasonably be expected to be
able to
implement, and is using commercially reasonable efforts to
implement, its recapitalization plan (the " MEC
Recapitalization Plan ") taking into account, among other
things, the associated milestones set forth on
Schedule B .
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Purpose:
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For general corporate purposes, in accordance with the MEC
Recapitalization Plan
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Drawdown
Availability:
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Draws as required, subject to satisfaction of conditions precedent
to tranche availability and drawdown.
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Page 1 of 13
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Term:
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Last day of the month that is 13 months from the month in
which the closing of the Bridge Loan occurs
(i.e., August 31, 2006 if closing occurs in
July 2005), with no extension or renewal rights.
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Arrangement Fee:
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$1 million, payable on closing; $500,000, payable on the date
(if any) on
which all or any part of Tranche 2 is made available to the
Borrower; and
$500,000, payable on the date (if any) on which all or any
part of Tranche
3 is made available to the Borrower.
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Pricing:
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At the Borrower's option:
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1.
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Floating rate, with interest per annum equal to the greater of:
(a) the U.S. Base Rate, as announced by Bank of Montreal
("BMO") from time to time, plus 550 bps and (b) 9% (with
interest in each case payable monthly in arrears);
and/or
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2.
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Fixed rate, with interest per annum equal to the greater of:
(a) LIBOR plus 650 bps and (b) 9%, subject to:
(i) minimum contract amounts of US$10 million;
(ii) not more than five contracts at any one time; and,
(iii) contract terms not to exceed three months, and in any
event not to extend beyond the expiry of the Term (with interest in
each case payable at contract maturity).
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Commitment Fee:
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100 bps per annum on the undrawn amount of the
$100 million maximum Bridge Loan Commitment, payable quarterly
in arrears.
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Mandatory
Repayment:
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The Bridge Loan will be repaid and the Bridge Loan Commitment will
be reduced in amounts equal to:
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100% of the net proceeds generated from any equity raise by the
Borrower or its subsidiaries, less any amounts required to be paid
to BMO pursuant to the MEC-BMO Credit Facility (the " BMO
Facility ") as set forth on Schedule C
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100% of the net proceeds generated from any debt raise (except for
the Gulfstream Loan (in the maximum amount of
$115 million plus capitalized interest and Lender's costs) and
the Remington Loan (in the maximum amount of
$34.2 million plus capitalized interest and Lender's Costs))
or asset sale by the Borrower or its subsidiaries related to Santa
Anita Park and/or Golden Gate Fields, subject to any requirement to
repay Wells Fargo and/or BMO with such net proceeds as set forth on
Schedule C
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Page 2 of 13
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100% of the net proceeds generated from any other debt raise
(except for the Gulfstream Loan and the Remington Loan (each in the
maximum amount specified above)) or asset sale by the Borrower or
its subsidiaries, less any amounts required to be paid to BMO as
set forth on Schedule C
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Unless used for repairs or reconstruction of damaged property as
approved by the Lender, acting reasonably, 100% of the net proceeds
of property insurance proceeds in excess of $1 million for the
Borrower, less any amounts required to be paid to Wells Fargo, if
applicable, and/or BMO, if applicable, as set forth on
Schedule C
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Net proceeds will be applied first to repay amounts advanced under
Tranches 1, 2 and 3 (in that sequence), and then, to
the extent there is no amount advanced under a given tranche, the
remaining commitment under such tranche will be reduced by an
amount equal to the excess amount of net proceeds (in the same
sequence).
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Voluntary Cancellation/
Repayment:
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The Bridge Loan Commitment may be permanently cancelled by the
Borrower, in whole or in part, without penalty subject to
10 business days notice. Amounts borrowed under the Bridge
Loan can be repaid at any time without penalty (subject to LIBOR
contract maturity dates). Amounts repaid cannot be
reborrowed.
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Security:
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See Schedule A.
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Authorization:
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The Lender is authorized to file UCC financing statements against
the Borrower and each of the Guarantors upon execution of this term
sheet.
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Page 3 of 13
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Conditions Precedent To
Funding:
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Standard conditions precedent to funding given the nature of the
transaction, including:
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Receipt of the MEC Recapitalization Plan (as approved by the
MEC Board), in form and substance satisfactory to the
Lender
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Lender satisfaction with the CB Richard Ellis appraisal for Santa
Anita prepared for Wells Fargo on September 10, 2004 in
connection with the extension of the Wells
Fargo – Santa Anita loan
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Receipt of appraisal for Golden Gate Fields
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Receipt of appraisal for Gulfstream (previously
delivered)
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Receipt of appraisal for Palm Meadows residential lands
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Receipt of appraisal for San Luis Rey Downs
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Receipt of appraisal for Dixon land
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Receipt of appraisal for Ocala land
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Lender satisfaction with environmental reports with respect to the
Borrower and the Guarantors
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Receipt of Amended BMO Facility, in form and substance satisfactory
to the Lender, in its sole discretion, and including an extension
of the term such that the Amended BMO Facility expires no earlier
than the last day of the month that is 12 months from the
month in which the closing of the Bridge Loan occurs
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Execution of Intercreditor Agreements in form and substance
satisfactory to the Lender, in its sole discretion, between
(a) the Lender and BMO and (b) the Lender and Wells
Fargo
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Execution of all Documentation
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Confirmation that all Representations and Warranties are true and
correct
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Receipt of favourable letters of opinion from counsel in form and
substance satisfactory to the Lender
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Registration of all registrable Security (subject to the provisions
below under "SHRCP Approval")
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Receipt of all approvals with respect to the Bridge Loan set forth
below under the heading "Board Approvals"
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Page 4 of 13
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Financial
Covenants:
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Santa Anita Park must maintain trailing 12 month EBITDA
(before intercompany fees and non-cash losses) of $11 million
and, beginning December 31, 2005, Golden Gate Fields must
maintain trailing 12 month EBITDA (before intercompany fees
and non-cash losses) of $4 million.
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Positive
Covenants:
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Standard positive covenants applicable to the Borrower and the
Guarantors, given the nature of the transaction and including
compliance with, and use of proceeds only as contemplated by, the
MEC Recapitalization Plan.
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Negative
Covenants:
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Standard negative covenants applicable to the Borrower and the
Guarantors, given the nature of the transaction and
including:
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Restrictions on other debt
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Restrictions on capital expenditures
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Restrictions on liens and sale-leaseback transactions
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Restrictions on financial assistance
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Restrictions on distributions (and other restricted
payments)
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Restrictions on amalgamations and reorganizations
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Restrictions on accounting policy changes
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Restrictions on investments and acquisitions (subject to a
carve-out permitting the Borrower to increase its investment in
Amtote International, Inc. (" Amtote ") at a cost not
to exceed $7 million, provided that the shares of the MEC
subsidiary that owns Amtote will be pledged to the
Lender)
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Reporting
Requirements:
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Customary for a transaction of this type, including (a) a
completed MEC consolidated 2006 business plan, including detail by
business unit, by no later than December 15, 2005 and
(b) reasonably detailed monthly progress reports on the 15
th day of each month with respect to the MEC
Recap
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