MIM Granite Real Estate, Inc.

NEW YORK, April 2, 2008 /PRNewswire/ -- Greenlight Capital is vehemently opposed to the proposed reorganization of MI Developments Inc. (NYSE:MIM) that was announced on Monday (the "Proposal"). Greenlight has been a major shareholder of MI Developments ("MID") since its spin-off in August 2003, holding more than 10% of the outstanding shares. Since the spin-off, MID has failed to execute a business plan to create value for shareholders over any reasonable time frame. Instead, Frank Stronach and his hand-picked board of directors (the "Board") have continued to pour MID money into the failing horse racing business and refused to implement the Board's own proposals for long-term shareholder value-creation. MID has depressed its own share price by implementing value-destroying actions. Now, Mr. Stronach and MID have effectively put a gun-to-the-head of MID shareholders and claim to have indications of support of institutional shareholders holding more than 50% of MID's Class A shares for the Proposal which includes an outrageous payoff to make Mr. Stronach stop his coercive tactics. Under the Proposal, Mr. Stronach will receive 10% of the stock of reorganized MID for free. MID will give up another 10% of the stock of reorganized MID to Magna International ("Magna"). In addition, MID will sell its controlling interest in Magna Entertainment Corp. ("MEC") for $25 million to Mr. Stronach. For the payment of an additional $25 million, Mr. Stronach will receive a 51% direct interest (and an additional 4.9% indirect interest) in a new partnership ("the LP") that will hold approximately $247 million of debt owed by MEC to MID, plus MID's development lands in Aurora, Ontario (valued at $50 million), plus $150 million of cash contributed by MID. So, in exchange for $25 million, Mr. Stronach will receive interests with an initial value of over $225 million plus 10% of reorganized MID. Overall, this transaction will result in a permanent value reduction to the existing MID shareholders of at least $10 per share (compared to what MID is worth if it acted in its shareholders' interests) and has the potential for likely additional value destruction (a) of up to $5 per share stemming from the LP, through which Mr. Stronach is effectively receiving the ability to fund MEC as he wishes, (b) from the damage to MID from the new "Leasing Framework" that will be used to re-negotiate the leases between MID and Magna, and (c) from Proposal fees and other transaction adjustments that will be detailed in the final documentation. Greenlight opposes making such an outrageous payoff to Mr. Stronach in order to permit MID to act in its own best interest without his further interference. "Mr. Stronach's proposal includes implementing many of the Board recommendations from 2005 and implicitly acknowledges that the solutions Greenlight suggested, including disposing of MEC, returning excess capital to shareholders, and operating a focused real estate investment vehicle, are optimal for MID. However, MID only seems to be willing to implement these solutions if they are accompanied by an outrageous multi-hundred million dollar payoff to Mr. Stronach," said David Einhorn, President of Greenlight Capital. MID has a long history of self-dealing under Mr. Stronach. In 2004, MID proposed acquiring the remainder of MEC. In response to lawsuits, vigorous shareholder disapproval and dissent within its own management, MID withdrew the proposed privatization. Since that time, MID has funneled $250 million to support its failing investment in MEC. In May 2005, Greenlight proposed that MID divest itself of its interest in MEC. The overwhelming number of MID's public shareholders (92% of the publicly-held Class A shares that were voted) agreed with Greenlight. Mr. Stronach defeated the proposal through his super-voting shares. While recommending against Greenlight's 2005 proposals, the Board proposed its own plan for increasing shareholder value. The Board's proposals included steadily increasing MID's financial leverage, regularly increasing dividends, opportunistically repurchasing MID shares and rationalizing MID's relationship with MEC. The Board's proposals were nothing more than lip service. Since adopting it, MID has failed to implement its own plan. MID has failed to increase its financial leverage, other than to advance additional funding to MEC. MID has failed to increase its dividend even once. MID has failed to win new business from Magna or pursue any other real-estate strategy with third parties. In Mr. Stronach's affidavit in a legal proceeding brought by Greenlight designed to remedy Mr. Stronach's and MID's oppressive behavior, Mr. Stronach threatened that Magna might withhold doing additional business with MID because Greenlight and other MID shareholders had pressed for change. Mr. Stronach stated: "Based on my extensive knowledge of Magna and its business managers, if MID changes as Greenlight would have it do, it is my expectation that they would not continue to deal with MID or certainly to do so on a much reduced scale. That is not something I am causing or would cause. It is not something I could prevent and stay true to the principles and philosophy that have made Magna the success that it is." Even though MID did not implement Greenlight's proposed changes, Magna has retaliated, just as Mr. Stronach threatened in his affidavit. But now, as long as Mr. Stronach receives a payoff, there's a promise of a strong working relationship between MID and Magna. In Monday's press release, MID's CEO, John Simonetti noted, "Over the last three years, disagreements with certain of MID's shareholders have impacted our relationship with Magna International and, as a result, impaired our ability to grow our core real estate business." It has never been explained and there is no reasonable explanation as to why separating MID from MEC should impact MID's relationship with Magna, except for Mr. Stronach's threatened and implemented retaliation. Rather than engage in a value destroying transaction, the Board can and should simply implement the steps that create value on its own. If it were inclined to do the right thing, the Board could return MID's excess capital to shareholders, increase annual distributions and dispose of MEC, without a shareholder vote and even over Mr. Stronach's objection. Clearly the Board can implement these steps in a more commercially reasonable manner without surrendering to Mr. Stronach hundreds of millions of dollars of value. The independent committee of MID directors evaluating the Proposal should approach third parties about acquiring control of MEC. The reason for MID's value destruction and the Board's inaction over the past few years is now obvious: Mr. Stronach has been trying to either extract a large payoff or make MID vulnerable to a discounted coercive "going private" transaction by Mr. Stronach or one of his affiliates. If MID shareholders don't go along with the unfair reorganization, then Mr. Stronach or another Stronach controlled entity will either attempt to buy MID at an artificially low valuation or sacrifice MID's remaining value in an ongoing charade of propping-up MEC, while at the same time directing Magna to withhold new business for MID. MID's own press release makes it clear that consummating the reorganization will "offer a new opportunity to re-establish a strong working relationship with Magna International." The threat is very clear: If the deal is approved, and Stronach is paid, then the oppression and intentional destruction of shareholder value will stop. If Greenlight and other shareholders do not agree to an outrageous payoff for Mr. Stronach, there will be no meaningful return of capital to shareholders, no change in MID's dividend policy, the embargo on new business from Magna will continue, as will the ongoing funding of MEC at all costs. This is a very coercive transaction. Greenlight intends to vote all of its shares against the proposed reorganization as it currently stands, and urges all other MID shareholders to vote against the proposed reorganization. DATASOURCE: Greenlight Capital CONTACT: Steve Bruce, Mary Beth Grover, or Monica Everett, all of Abernathy MacGregor for Greenlight Capital, +1-212-371-5999

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