A team of shareholders of MI Developments Inc. has proposed overhauling the company to pay a massive dividend and operate as a real estate investment fund, the Canadian property management company said Monday.
Aurora, Ontario-based MI Developments' board received a proposal from shareholders owning a majority of the company's stock. Led by Frank Stronach's investment fund, the shareholders propose that MI Developments pay a $15.50 dividend and transform into a new company.
The new company would be 80 percent owned by current public shareholders, 10 percent owned by Stronach Group and 10 percent owned by Magna International Inc., an auto parts supplier that is MI Developments' former parent.
Magna International and its subsidiaries are the tenants of virtually all of MI Developments' income producing properties, according to the real estate company's Web site.
Under the reorganization plan, MI Developments' nine-member board would have five directors nominated by Stronach and four nominated by Magna International.
The new company would also sell its controlling stake in racetrack operator Magna Entertainment Corp. for $25 million cash.
The plan calls for the new company to transfer to a separate entity its roughly $247 million in loans to Magna Entertainment, along with $150 million in cash. That company, to be set up as a limited partnership, would be majority owned by Stronach Group, which would invest an additional $25 million in it, and minority owned by MI's shareholders.
The reorganization proposal is conditional upon several factors, including Magna International's participation, and its provision of a $1 billion five-year loan to the new MI Developments. Magna International has not made any commitment to participate in the reorganization, MI Developments said.
Shares of MI Developments surged $3.59, or 14.2 percent, to $28.85 in afternoon trading Monday.
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