Greenlight challenge to Stronach defeated at MI Developments annual meeting
- A reform proposal by dissident shareholder Greenlight Capital was defeated, as expected, at the annual meeting of MI Developments Inc. (TSX:MIM.A) - a dramatic event featuring an emotional speech by company founder Frank Stronach.
Greenlight, a New York investment firm, had called for MI Developments to provide only short-term funding to horse-track subsidiary Magna Entertainment (TSX:MEC.A), and for the land developer to raise its dividend, repurchase stock and increase debt.
The Greenlight proposal went down to defeat Wednesday, and Stronach - the controlling shareholder of MID, MEC and Magna International (TSX:MG.A), from which they were spun off - joined MI Developments chief executive John Simonetti in calling for an end to the public feud with Greenlight.
"We need to end this stalemate," Simonetti said. "And to me, this means thinking about changing our framework. But it needs to be changed in a manner that takes into account the various objectives of the shareholders of this company."
"And equally important, in my mind, Magna (International) is a key stakeholder. Magna is our most important customer and potential source of growth."
Coincident with the annual meeting, MI Developments - whose main business is running the property assets of Magna International factories - released its first-quarter results. The company, which reports in U.S. dollars, said earnings fell to $6.6 million or 14 cents per share, compared with a year-ago profit of $23.3 million, 48 cents per share.
The real-estate business increased its revenue to $54 million from $44.8 million and raised its earnings to $31 million from $23.7 million, but the majority holding in money-losing Magna Entertainment dragged back the bottom line.
Simonetti said a management-supported restructuring proposal was supported by more than half MI Developments' class A shares and 95 per cent of the class B multiple-voting shares, which are mostly held by Stronach.
That proposal calls for MID to sell its stake in the heavily indebted horse-track company to a Stronach investment group for $25 million. MID would also make a cash distribution of $15.50 per share to its stockholders and eliminate the dual-class share structure.
Magna International and Stronach are to each own 10 per cent of MID, with the rest held by the company's minority shareholders.
About $150 million of loans owed by Magna Entertainment to MI Developments would be transferred to a new partnership owned 51 per cent by Stronach and 49 per cent by MID public shareholders.
Copyright © 2008 The Canadian Press, All Rights Reserved.
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