A new Magna Entertainment Corp.?

Apr 1, 2008 7:00 PM

by Ray Poirier | A company that has been funding Magna Entertainment Corp. (MECA) by optioning or buying the latter’s excess real estate is reviewing a reorganization plan.

Under the proposal made by majority stockholder Frank Stronach, MI Development Inc. would pay a $15.50 dividend and transform itself into a new company. That new entity would transfer to a separate entity its $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.

Following the establishment of the new company, Stronach Group would invest an additional $25 million in the new firm.

Upon the release of the proposal, shares of MI Development jumped 14.2% to $28.85.