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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): February 18, 2009

MAGNA ENTERTAINMENT CORP.


(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

000-30578 98-0208374
(Commission File Number) (I.R.S. Employer Identification No.)

337 Magna Drive, Aurora, Ontario, Canada L4G 7K1


(Address of Principal Executive Offices) (Zip Code)

(905) 726-2462
(Registrant’s Telephone Number, Including Area Code)

Not Applicable
(Former Name or Former Address, if changed since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.02 Termination of a Material Definitive Agreement

On February 18, 2009, MI Developments, Inc. (“MID”), the Registrant’s controlling shareholder, terminated the November 25, 2008 transaction
agreement (the “Transaction Agreement”) between the Registrant, MID and entities affiliated with MEC’s Chairman and Chief Executive
Officer, Frank Stronach.

The Transaction Agreement contemplated, among other things, a multi-step series of proposed transactions designed to recapitalize and
reposition the Registrant to enable it to pursue its strategy of horse racing, gaming and entertainment on a standalone basis. The Transaction
Agreement was previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on December 2,
2008.

As a result of MID’s decision regarding the reorganization proposal and Transaction Agreement and in accordance with the terms of certain of
the Registrant’s loan agreements, the maturity date of the first tranche of the new loan that a subsidiary of MID (“MID Lender”) made
available to the Registrant on December 1, 2008 in connection with the reorganization proposal (the “New Loan”), the maturity date of the
bridge loan from MID Lender and the deadline for repayment of US$100 million under the Gulfstream project financing facility from MID
Lender will each be accelerated, respectively, to March 20, 2009. The maturity date of the second tranche of the New Loan has already been
accelerated to May 13, 2009. As of February 18, 2009, there was approximately US$48.5 million outstanding under the first tranche of the New
Loan, approximately US$0.7 million outstanding under the second tranche of the New Loan and approximately US$126.2 million outstanding
under the bridge loan. In accordance with its terms, the maturity date of MEC’s US$40 million credit facility with a Canadian chartered bank will
also accelerate to March 5, 2009. If the Registrant is unable to repay its obligations when due or satisfy required covenants in its loan
agreements, substantially all of its other current and long-term debt will also become due on demand as a result of cross-default provisions
within loan agreements, unless the Registrant is able to obtain waivers, modifications or extensions. In the event MEC is unsuccessful in its
efforts to raise additional funds, through an alternative transaction with MID, assets sales, by taking on additional debt or by some other
means, the Registrant will not be able to meet such obligations.

The full text of the Registrant’s February 18, 2009 press release announcing that MID is not proceeding with the previously announced
reorganization proposal is attached as Exhibit 99.1 to this Current report on Form 8-K and is incorporated by reference herein.

The Registrant is in discussions with MID concerning alternatives to the reorganization proposal. The Registrant also cautioned shareholders
and others considering trading in securities of the Registrant that there can be no assurance that any alternative transaction will be completed.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

Exhibit 99.1 Press Release dated February 18, 2009.

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 thereunto duly authorized.

MAGNA ENTERTAINMENT CORP.


(Registrant)

February 20, 2009 by: /S/WILLIAM G. FORD


William G. Ford,
Secretary

Exhibit 99.1

Magna Entertainment Corp.

337 Magna Drive


Aurora, Ontario,
Canada L4G 7K1
Tel (905) 726-2462
Fax (905) 726-2585

MAGNA ENTERTAINMENT CORP.


ANNOUNCES CONTROLLING SHAREHOLDER IS NOT PROCEEDING
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WITH PREVIOUSLY ANNOUNCED REORGANIZATION PROPOSAL

Aurora, ON, February 18, 2009 - Magna Entertainment Corp. (“MEC” or “the Company”) (NASDAQ: MECA; TSX: MEC.A) was today
informed by MI Developments Inc. (“MID”), MEC’s controlling shareholder, that MID will not be proceeding with its reorganization proposal.
MEC is in discussions with MID concerning alternatives to the reorganization proposal. MEC cautions shareholders and others considering
trading in securities of MEC that there can be no assurance that any alternative transaction will be completed.

In accordance with the terms of certain of MEC’s loan agreements, the maturity date of the first tranche of the new loan that a subsidiary of
MID (“MID Lender”) made available to MEC on December 1, 2008 in connection with the reorganization proposal (the “New Loan”), the
maturity date of the bridge loan from MID Lender and the deadline for repayment of US$100 million under the Gulfstream project financing
facility from MID Lender will each be accelerated, respectively, to March 20, 2009. The maturity date of the second tranche of the New Loan
has already been accelerated to May 13, 2009. As of February 18, 2009, there is approximately US$48.5 million outstanding under the first
tranche of the New Loan, approximately US$0.7 million outstanding under the second tranche of the New Loan and approximately US$126.2
million outstanding under the bridge loan. In accordance with its terms, the maturity date of MEC’s US$40 million credit facility with a
Canadian chartered bank will also accelerate to March 5, 2009. If MEC is unable to repay its obligations when due or satisfy required
covenants in its loan agreements, substantially all of its other current and long-term debt will also become due on demand as a result of cross-
default provisions within loan agreements, unless MEC is able to obtain waivers, modifications or extensions. In the event MEC is
unsuccessful in its efforts to raise additional funds, through an alternative transaction with MID, assets sales, by taking on additional debt or
by some other means, MEC will not be able to meet such obligations.

ABOUT MEC

MEC, North America’s largest owner and operator of horse racetracks, based on revenue, develops, owns and operates horse racetracks and
related pari-mutuel wagering operations, including off-track betting facilities. MEC also develops, owns and operates casinos in conjunction
with its racetracks where permitted by law. MEC owns and operates AmTote International, Inc., a provider of totalisator services to the pari-
mutuel industry, XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally.
Pursuant to joint ventures, MEC has a fifty percent interest in HorseRacing TV(R), a 24-hour horse racing television network, and TrackNet
Media Group LLC, a content management company formed for distribution of the full breadth of MEC’s horse racing content.

This press release contains “forward-looking statements” within the meaning of applicable securities legislation, including Section 27A of the
United States Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the United States Securities Exchange Act of 1934,
as amended (the “Exchange Act”) and forward-looking information as defined in the Securities Act (Ontario) (collectively referred to as
forward-looking statements). These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and the Securities Act (Ontario) and include, among others, statements regarding MEC’s liquidity, discussions
with MID and other matters that are not historical facts.
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Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications
of whether or the times at or by which such performance or results will be achieved. Undue reliance should not be placed on such statements.
Forward-looking statements are based on information available at the time and/or management’s good faith assumptions and analyses made in
light of the Company’s perception of historical trends, current conditions and expected future developments, as well as other factors we
believe are appropriate in the circumstances and are subject to known and unknown risks, uncertainties and other unpredictable factors, many
of which are beyond the Company’s control, that could cause actual events or results to differ materially from such forward-looking
statements. Important factors that could cause actual results to differ materially from the Company’s forward-looking statements include, but
may not be limited to, the risk that the Company and MID fail to successfully agree upon any alternative transaction to the reorganization
proposal previously announced on November 26, 2008, the inability of the Company to obtain additional financing and funds from one or more
possible sources, which may include MID, in order to fund its operations, implement its strategic plan and capitalize on future growth
opportunities, and material adverse changes in: general economic conditions; the popularity of racing and other gaming activities as
recreational activities; the regulatory environment affecting the horse racing and gaming industries; the Company’s ability to obtain or
maintain government and other regulatory approvals necessary or desirable to proceed with proposed real estate developments; increased
regulation affecting certain of the Company’s non-racetrack operations, such as broadcasting ventures; and the Company’s ability to develop,
execute or finance the Company’s strategies and plans within expected timelines or budgets. In drawing conclusions set out in our forward-
looking statements above, we have assumed, among other things, that we will continue with our efforts to implement our September 2007
adopted plan to eliminate the Company’s debt, although not on the originally contemplated time schedule, negotiate and close, on acceptable
terms, one or more core asset sale transactions, comply with the terms of and/or obtain waivers or other concessions from our lenders and
refinance or repay on maturity our existing financing arrangements (including a senior secured revolving credit facility with a Canadian
chartered bank, the new loan that a subsidiary of MID (“MID Lender”) made available to MEC on December 1, 2008 and the bridge loan from
MID Lender, possibly obtain additional financing on acceptable terms to fund our ongoing operations and there will not be any material
further deterioration in general economic conditions or any further significant decline in the popularity of horse racing and other gaming
activities beyond that which has already occurred in the current economic downturn; nor any material adverse changes in weather and other
environmental conditions at our facilities, the regulatory environment or our ability to develop, execute or finance our strategies and plans as
anticipated.

Forward-looking statements speak only as of the date the statements were made. We assume no obligation to update forward-looking
statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking statements. If we update one
or more forward-looking statements, no inference should be drawn that we will make additional updates with respect thereto or with respect to
other forward-looking statements.

SOURCE: Magna Entertainment Corp.

Blake Tohana, Executive Vice-President and Chief Financial Officer, Magna Entertainment Corp., 337 Magna Drive, Aurora, ON L4G 7K1, Tel:
905-726-7493, www.magnaent.com