Magna said yesterday that it has entered into an agreement with parent MI Developments to reorganize and emerge as a stand-alone company. The relationship between Magna and MID has been a source of discontent for MID shareholders, who want the company to stop financially supporting the money-losing racetrack operations.
MID owns nearly 60 percent of Magna. Under the plan, MID would no longer have an ownership interest in Magna, which would eventually be controlled by Magna founder and CEO Frank Stronach's investment vehicle. MID would be barred from investing any more funds into Magna without the approval of minority MID shareholders.
A special shareholder meeting is expected in the first quarter of 2009. Magna owes MID more than $200 million; the repayment date has been extended to March 31. Until the special shareholder meeting, MID is providing a new loan of up to $50 million to Magna so that the racetrack company can continue to operate.
