By Ray Paulick
Another day, another Schedule 13D filing with the Securities and Exchange Commission from an institutional investor concerning MI Developments, the parent company of bankrupt Magna Entertainment, the racing company created by Eclipse Award-winning Thoroughbred owner and breeder Frank Stronach.
Monday's filing came from North Run Advisors, a Boston-based investment firm that spent just over $25 million to buy 2.3 million shares in MI Developments (MIM), roughly 5% of the company's outstanding Class A stock. Half of North Run's holdings in Mi Developments were bought in early February. North Run said it has joined with other shareholders in retaining counsel to consider legal action against the MI Developments board, which is also controlled by Stronach.
The 13D letter reads, in part: “Collectively with other large shareholders, together representing close to half of the outstanding Class A Shares as of March 4, 2009, (North Run Advisors) have retained counsel to explore the legal remedies available to shareholders of (MI Developments) in connection with related party transactions involving Magna Entertainment Corp., including whether claims should be asserted against directors of the Issuer. Such counsel recently sent a letter to the Issuer's board of directors notifying them of such initiative.”
MI Developments is Magna Entertainment's largest shareholder and has pumped hundreds of millions of dollars into the company through credit and cash, much to the dismay of some institutional investors who have seen share prices in MI Developments decline. When Magna Entertainment filed chapter 11 bankruptcy March 5, MI Developments offered debtor in possession financing and made a “stalking horse bid” to acquire several of the company's racetracks for $195 million for cash and other considerations.
In related news, Magna Entertainment was notified by the NASDAQ stock market that it is being delisted and trading of the company's stock will be suspended March 16. Monday's closing price for Magna Entertainment stock (MECA) was eight cents per share.
Copyright © 2009, The Paulick Report
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