Eskendereya sale part of Zayat plan

LEXINGTON, Ky. -- A Chapter 11 reorganization plan that Thoroughbred owner Ahmed Zayat has filed projects that he will sell 100 percent of Kentucky Derby favorite Eskendereya this year.

Zayat made this and other projections as part of detailed filings on April 16 in a New Jersey bankruptcy court. The reorganization plan must be approved by a select creditors' committee as well as by the court before it can go into effect. In his projections, Zayat assumes the stable "will sell a sufficient number of horses, including 100 percent of Eskendereya in 2010," to achieve sales proceeds of $16.8 million, $15.2 million, $10 million, $11 million, and $11 million in 2010, 2011, 2012, 2013, and 2014, respectively. A non-refundable deposit of $2 million is assumed to be received in September 2010 from the sale of Eskendereya, with the remaining Eskendereya proceeds assumed to be received in December 2010.

Zayat Stables, one of North America's leading owners, filed for Chapter 11 bankruptcy protection in February after Fifth Third Bank sued the stable for allegedly defaulting on a series of loans totaling about $34 million. Zayat has countersued Fifth Third, alleging deceptive and predatory lending practices.

Eskendereya's value, which is not projected in the reorganization plan, could play a major role in the Fifth Third case. Even in a depressed stallion market, the 100-percent sale of a Grade 1-winning Triple Crown contender could bring in enough income to significantly offset the amount Fifth Third alleges Zayat Stables owes.

Eskendereya, a $250,000 September yearling purchase, is by leading sire Giant's Causeway. So far, he has earned $725,700 from wins in four of six starts. He is riding a three-race win streak into the Derby. That includes an 8 1/2-length score in the Grade 2 Fountain of Youth and a 9 3/4-length victory in the Grade 1 Wood Memorial.

Zayat's projection to sell 100 percent of the colt is something of a departure from his previous handling of his top colts' stud careers. Zayat kept substantial interests in two previous multiple Grade 1 winners now at stud, Zensational and Pioneerof the Nile.

Zayat's projections also assume that Zayat Stables' stud fee revenue will increase significantly, from $65,000 in 2010 to nearly $5 million by 2014.

The projections also assume significant income from the stable's racetrack performances. The plan projects four starts per horse for 80 percent of the stable's juveniles and six starts for older runners. "Purse income winnings assume 20 percent placing 1st and 30 percent placing either 2nd or 3rd, the documents stipulate. The average purse size is assumed to be $38,500 (2010), with 3 percent annual increases thereafter. ... In addition, 2010 assumes large purse wins of $2M and 2011-2014 assumes large purse winnings of $2.5M annually."

For lower-quality runners, the plan projects approximately $500,000 annually in revenue from horses sold through the claim box.

Under the plan, Zayat also intends to continue purchasing bloodstock for the stable. The projections assume bloodstock purchases of $2.5 million, $2 million, $1 million, $1 million, and $1 million in 2010, 2011, 2012, 2013, and 2014, respectively, as well as the birth of approximately 80 foals through 2012 period.

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