MI Developments shareholder considers legal action

By Lisa Kerner

Charlotte, N.C., April 2 - North Run Capital, LP along with other MI Developments, Inc. shareholders, retained counsel to explore legal remedies available to them in connection with related party transactions involving Magna Entertainment Corp.

The group collectively owns close to half of MI Developments' outstanding class A shares, according to a schedule 13D/A filed on Thursday with the Securities and Exchange Commission.

MI Developments has been under fire from shareholders who want the company to enforce Magna Entertainment's debt obligations to MI Developments when they come due.

As previously reported, MI Developments' bridge loan to Magna Entertainment and the first tranche of the new loan to Magna Entertainment were accelerated to March 20 as was the deadline to repay $100 million under the Gulfstream project financing.

The maturity of the second tranche of the new loan was accelerated to May 13.

There is $48.5 million outstanding on the first tranche of the new loan, $0.7 million on the second tranche and $126.2 million on the bridge loan, it was previously reported.

MI Developments abandoned its planned reorganization announced on Nov. 26, accelerating loans owed to the company by Magna Entertainment.

Magna Entertainment entered into an agreement with controlling shareholder MI Developments and entities affiliated with Magna Entertainment chairman and chief executive officer Frank Stronach for transactions including the spinoff of Magna Entertainment to MI Developments' existing shareholders, according to a prior news release.

North Run beneficially owns 5.1% of the Aurora, Ont., real estate development company, the filing said.

Magna Entertainment owns and operates horse racetracks. It is also based in Aurora, Ont.

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