MI Developments shareholders submit reorganization proposal

By Lisa Kerner

Charlotte, N.C., March 31 - MI Developments Inc. said it received a reorganization proposal from various shareholders including its controlling shareholder, Frank Stronach of the Stronach Group.

The goal of the reorganization is to return cash to shareholders.

According to an MI Developments news release, the proposal has 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.

Under the plan, holders of MI Developments' class A subordinate voting shares and class B shares would exchange 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, the release said.

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.

In addition, the new MI Developments would alter its capital structure by significantly increasing its credit facilities to $1.1 billion and distribute at least 80% of its available annual cash flow to its shareholders, MI Developments said.

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.

MI Developments said it will call a special meeting of shareholders to consider the proposal by May 30 and expects the transaction to close by July 30.

Chief executive officer John Simonetti said the reorganization proposal is an opportunity for the company to re-establish its relationship with Magna International, which had been strained by disagreements with certain MI Developments shareholders.

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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