Farallon Capital to MI Developments: Work on reorganization proposal that shareholders will support

By Lisa Kerner

Charlotte, N.C., Aug. 26 - MI Developments Inc. shareholders led by Farallon Capital Management, LLC urged the company's board of directors to resume work with management and the company's chairman Frank Stronach on a reorganization proposal that would be capable of receiving widespread shareholder support.

The investors, with an 8.5% ownership interest, made their request in an Aug. 25 letter to MI Developments, it was reported in a schedule 13D filed with the Securities and Exchange Commission.

Farallon said it believes in the importance of MI Developments "presenting to shareholders a transaction that will: offer a realistic way to align interests by eliminating the company's dual-class voting structure; implement best-in-class corporate governance arrangements; and enable the company to reestablish its business relationship with Magna International, Inc."

In addition, the investors said there is no business justification for MI Developments to continue its financial support of Magna Entertainment Corp.

Farallon and its affiliates also terminated their March 31 support agreement with 2167951 Ontario Inc., a new Ontario corporation formed for the purpose of participating in the reorganization.

It was previously reported that MI Developments retained GMP Securities LP to act as a liaison with shareholders in an attempt to develop a consensus on the company's reorganization.

The company hoped to reach a shareholder consensus earlier in the month regarding potential amendments to the March 31 reorganization proposal submitted by controlling shareholder Stronach and his affiliates.

Stronach's reorganization proposal calls for holders of MI Developments' class A subordinate voting shares and class B shares to 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 to an entity to be identified by the Stronach Group for $25 million in cash, a prior news 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.

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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