MI Developments says shareholder has tried to tell the company how to operate since 2003

By Lisa Kerner

Charlotte, N.C., April 2 - MI Developments Inc. said a Greenlight Capital news release mischaracterized the way the company conducts business.

Greenlight was reacting to the reorganization proposal MI Developments received from various shareholders including its controlling shareholder, Frank Stronach of the Stronach Group.

According to MI Developments, Greenlight has "attempted to impose its views" on MI Developments' operations and structure since 2003.

The investor took the company to court in 2005 after filing an oppression application. The Ontario Superior Court dismissed Greenlight's complaints; however, an appeal hearing is scheduled for this month, the release said.

MI Developments said its board of directors has formed a special committee of independent directors to consider the reorganization proposal and make recommendations to the company's board.

Implementation of the reorganization proposal is conditional upon the approval by at least two-thirds of the votes cast by the holders of MI Developments' class A subordinate voting shares and class B shares, voting separately, the company said.

It was previously reported that the proposal had received indications of support from shareholders owning more than 50% of the outstanding class A subordinate voting shares and some 95% of the outstanding class B shares.

The goal of the reorganization is to return cash to shareholders, an MI Developments news release said.

Under the plan, holders of MI Developments' class A subordinate voting shares and class B shares would exchange each of their existing shares for $15.50 in cash and shares of a new public company.

MI Developments would sell its controlling equity investment in Magna Entertainment Corp. to an entity to be identified by the Stronach Group for $25 million in cash, it was previously noted.

The new MI Developments would be owned 80% by the former public shareholders, 10% by an entity affiliated with Stronach and 10% by Magna International Inc. Its board of directors would consist of nine members: five nominated by the Stronach Group and Magna International and four nominated by the public shareholders, a prior news release stated.

It was also reported that the new MID Developments would alter its capital structure by significantly increasing its credit facilities to $1.1 billion and would distribute at least 80% of its available annual cash flow to its shareholders.

The proposed reorganization would be carried out by way of a court-approved plan of arrangement under Ontario law and would be subject to applicable shareholder and regulatory approvals.

A special meeting of shareholders will be held by May 30 to consider the proposal, and MI Developments said it expects the transaction to close by July 30.

MI Developments is an Aurora, Ont.-based real estate operating company engaged in the ownership, development, management, leasing and acquisition of industrial and commercial real estate properties located in North America and Europe.

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