MI DEVELOPMENTS RECEIVES PROPOSAL FOR ELIMINATION OF DUAL CLASS SHARE STRUCTURE FROM CLASS A SHAREHOLDERS AND ITS CONTROLLING SH
December 22 2010 - 2:20PM
PR Newswire (Canada)
AURORA, ON, Dec. 22 /CNW/ -- AURORA, ON, Dec. 22 /CNW/ - MI
Developments Inc. ("MID") (TSX: MIM.A, MIM.B; NYSE: MIM) announced
that its Board of Directors has received a reorganization proposal
providing for the elimination of MID's dual class share
structure. The proposal has been made by holders of its Class
A Subordinate Voting Shares representing in excess of 50% of the
outstanding Class A Subordinate Voting Shares (the "Initiating
Shareholders"), including eight of MID's top ten
shareholders. The proposal is also supported by MID's
controlling shareholder (the "Stronach Shareholder"), a company
controlled by the Stronach Trust. The Board of Directors of MID has
established a Special Committee of independent directors to review
and evaluate the proposal and to make recommendations to the
Board. The Board of Directors will communicate further with
MID's shareholders in due course. The reorganization proposal
contemplates the elimination of MID's dual class share structure
through: -- The cancellation of all MID Class B Shares held by the
Stronach Shareholder in consideration for the transfer to the
Stronach Shareholder of MID's horseracing, gaming and real estate
development and other assets (and associated liabilities), and
US$20 million of working capital (the "Assets"). The Assets
include: Santa Anita Park; Golden Gate Fields; MID's joint venture
interests in Maryland Jockey Club's real estate and racing assets
(Pimlico Race Course, Laurel Park and the Bowie training facility);
Gulfstream Park and MID's joint venture interest in the associated
retail development; Portland Meadows; horseracing technology assets
including Xpressbet® and AmTote; and all properties owned by MID as
described under "Real Estate Business - Development Properties" in
note 6(a) of the notes to the amended and restated interim
consolidated financial statements of MID for the period ended
September 30, 2010; and -- Each MID Class A Subordinate Voting
Share would be changed into one common share and each MID Class B
Share (other than the MID Class B Shares held by the Stronach
Shareholder which will be cancelled) would be converted into 1.2
common shares, such that MID would only have one class of common
shares. Upon completion of the reorganization proposal, MID would
retain its income producing real estate property business and would
be restricted from engaging in or having an interest in, directly
or indirectly, any business relating to horse racing or gaming, and
the Board of Directors of MID would be comprised of directors
elected by shareholders other than the Stronach Shareholder at the
shareholders meeting called to consider the reorganization
proposal, with the nominees for election to be proposed by the
Initiating Shareholders. The proposal contemplates that if the
transfer of the Assets is completed, the transfer would be
effective January 1, 2011. MID would provide funding for the
Assets during the period from January 1, 2011 to closing, provided
that if the funding requirements exceed on average US$4 million per
month, the Stronach Shareholder would reimburse MID for such
excess. The Stronach Shareholder would have a right of first
refusal in respect of the Magna International corporate properties
in Aurora, Ontario and in Oberwaltersdorf, Austria. In
addition, the proposal contemplates that effective upon closing,
the applicable Initiating Shareholders would discontinue the
litigation against MID and certain related parties filed with the
Ontario Superior Court of Justice and MID would reimburse the
Initiating Shareholders for their legal and advisory fees incurred
in connection with the transaction and up to US$1 million for other
legal and advisory fees, and reimburse the Stronach Shareholder for
up to US$1 million of legal and advisory fees incurred in
connection with the transaction. The proposal contemplates that the
transaction will be implemented by way of a court-approved plan of
arrangement under the Business Corporations Act (Ontario) or other
form of transaction agreed to by the parties. The principal
closing conditions of the proposed reorganization include receipt
of regulatory approvals, receipt of required MID shareholder
approvals, there being no material adverse change in the affairs of
MID, MID continuing to operate in the ordinary course and not
purchasing any unrelated gaming or horseracing assets, accuracy of
MID's disclosure documents, execution of definitive documents by
January 31, 2011 and implementation of the transaction by June 30,
2011. The Initiating Shareholders and the Stronach Shareholder have
agreed to vote in favour of the proposed reorganization. ST
Acquisition Corp. has advised MID that, as a result of the
reorganization proposal, it is suspending its earlier proposal
announced on October 1, 2010 to make an offer to purchase any or
all of the outstanding Class A Subordinate Voting Shares and Class
B Shares of MID for a price of US$13 per share pending completion
of the reorganization proposal. The Initiating Shareholders may
terminate their voting agreements if, among other things,
definitive documents are not executed by January 31, 2011, the
transaction has not been completed by June 30, 2011, the voting
agreement has not been signed by a majority of the minority holders
of the MID Class B Shares by January 31, 2011, or less than 30% of
all outstanding MID Class A Subordinate Voting Shares remain
subject to the voting agreement. MID cautions shareholders and
others considering trading in securities of MID that it has only
recently received the reorganization proposal, and at this time no
decisions or recommendations with respect to the proposal have been
made by the Board of Directors of MID. The proposal is
subject to certain material conditions, some of which are beyond
MID's control, and there can be no assurance that the transaction
contemplated by the reorganization proposal, or any other
transaction, will be completed. About MID MID is a real estate
operating company engaged primarily in the acquisition,
development, construction, leasing, management and ownership of a
predominantly industrial rental portfolio leased primarily to Magna
International Inc. and its automotive operating units in North
America and Europe. MID also acquires land that it intends to
develop for mixed-use and residential projects. Additionally, MID
owns Santa Anita Park, Golden Gate Fields, Gulfstream Park
(including an interest in The Village at Gulfstream Park, a joint
venture with Forest City Enterprises, Inc.), an interest in joint
ventures in The Maryland Jockey Club with Penn National Gaming,
Inc., Portland Meadows, AmTote and XpressBet®, and through some of
these assets, is a supplier, via simulcasting, of live horseracing
content to the inter-track, off-track and account wagering markets.
For further information about MID, please visit
www.midevelopments.com or call 905-713-6322. MID's filings can be
accessed at www.sedar.com and www.sec.gov you can also find MID's
filings. Copies of financial data and other publicly filed
documents are available through the internet on Canadian Securities
Administrators' Systems for Electronic Document Analysis and
Retrieval (SEDAR) which can be accessed at www.sedar.com and on the
United States Securities and Exchange Commission's Electronic Data
Gathering, Analysis and Retrieval System (EDGAR) which can be
accessed at www.sec.gov. Notice to Investors This news release is
for informational purposes only and is not an offer to buy or the
solicitation of an offer to sell any securities. The reorganization
proposal to which this communication relates has not yet commenced.
Forward Looking Statements This press release contains statements
that, to the extent they are not recitations of historical fact,
constitute "forward-looking statements" within the meaning of
applicable securities legislation. Forward-looking statements
include statements regarding MID's future plans, goals, strategies,
intentions, beliefs, estimates, costs, objectives, economic
performance or expectations, or the assumptions underlying any of
the foregoing. Words such as "may", "would", "could", "will",
"likely", "expect", "anticipate", "believe", "intend", "plan",
"forecast", "project", "estimate" and similar expressions are used
to identify forward looking statements. Forward-looking statements
should not be read as guarantees of future events, performance or
results and will not necessarily be accurate indications of whether
or the times at or by which such future performance will be
achieved. Undue reliance should not be placed on such statements.
Forward-looking statements are based on information available at
the time and/or management's good faith assumptions and analyses
made in light of our perception of historical trends, current
conditions and expected future developments, as well as other
factors we believe are appropriate in the circumstances, and are
subject to known and unknown risks, uncertainties and other
unpredictable factors, many of which are beyond MID's control, that
could cause actual events or results to differ materially from such
forward-looking statements. Important factors that could cause such
differences include, but are not limited to, the risks set forth in
the "Risk Factors" section in MID's Annual Information Form for
2009, filed on SEDAR at www.sedar.com and attached as Exhibit 1 to
MID's Annual Report on Form 40-F for the year ended December 31,
2009, which investors are strongly advised to review. The "Risk
Factors" section also contains information about the material
factors or assumptions underlying such forward-looking statements.
Forward-looking statements speak only as of the date the statements
were made and unless otherwise required by applicable securities
laws, MID expressly disclaims any intention and undertakes no
obligation to update or revise any forward-looking statements
contained in this press release to reflect subsequent information,
events or circumstances or otherwise. To view this news release in
HTML formatting, please use the following URL:
http://www.newswire.ca/en/releases/archive/December2010/22/c7399.html
pFor further information about this press release, please contact
Rocco Liscio, MID's Executive Vice-President and Chief Financial
Officer, at 905-726-7507./p
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