Greenlight Capital takes aim at MI Developments board over Magna Entertainment funding

By Lisa Kerner

Charlotte, N.C., Nov. 4 - Shareholder Greenlight Capital, Inc. said the board of directors of MI Developments Inc. violated its duties by ignoring an offer made on Oct. 2 by Halsey Minor to acquire project financings and bridge loans from the company.

According to Greenlight, on Oct. 15 MI Developments instead elected to extend the maturity of the bridge loan to Magna Entertainment Corp. until Dec. 1 and extend an additional $19.5 million of financing under the bridge loan.

In a Nov. 4 letter to MI Developments, Greenlight said the company's shareholders have no reason to believe that the company will ever stop funding Magna Entertainment while under the direction of Frank Stronach or his "cronies" on MI Developments' board of directors.

The letter was included in a schedule 13D/A filed with the Securities and Exchange Commission.

Greenlight said MI Developments ignored a bona fide third-party offer hoping it would "go away so that Mr. Stronach can continue funding MEC without limit."

In August, Greenlight expressed concern about MI Developments' investment in Magna Entertainment and asked the board to protect the interests of its minority shareholders.

It was previously reported that MI Developments postponed its special meeting scheduled for July 24 where shareholders were to vote on a reorganization proposal submitted by Stronach and his affiliates.

Stronach's 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.

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., according to MI Developments.

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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