Magna to pay its founder nearly $900 million to give up his controlling shares

Article by Christian Andrei, on August 27, 2010

Magna International Inc. had scheduled a shareholder vote on June 28 but the company had recently announced that it has postponed this and will set a new date "in due course."

Magna also said that it will give more information to its shareholders about a plan to pay almost $900 million to its founder to give up controlling shares.

This decision was arrived at after Canada's main stock market regulator, the Ontario Securities Commission, said that Magna would have to give more details to shareholders about the proposed transaction with Frank Stronach.  

According to a statement from a three-member panel of the OSC, the "circular does not provide sufficient disclosure to shareholders to permit them to make an informed decision."

Vincent Galifi, chief financial officer of Magna, said that Magna aims to cooperate with the OSC staff to "address the commission's concerns and comply with the OSC's additional disclosure requirements."

The OSC asked for approval from the panel that James Turner leads for a cease-trade order on Magna's Class 'B' shares or a ban on issuing new 'A' shares to stop the company from converting stock that gives control to Stronach.

At a hearing in Toronto, commission lawyer James Angus told the panel that the commission had determined that shareholders don't have all the information to make an informed decision and that a vote is welcome. [via autonews]

Topics: magna

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