Magna investors to have say at share plan hearing

Fri Jun 18, 2010 4:44pm EDT
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By John McCrank

TORONTO (Reuters) - A group of institutional shareholders opposed to Magna International's controversial share restructuring plan will have a limited say at a hearing to decide whether the auto parts maker's plan will go ahead, an Ontario regulator said on Friday.

The Ontario Securities Commission will decide at a hearing beginning on Wednesday if Magna can proceed, as is, with its plan to pay its founder Frank Stronach nearly $900 million in cash and newly issued stock to give up his supra-voting shares, through which he controls the company.

If approved by regulators and a majority of shareholders, the move would end Magna's dual-class share structure.

Analysts have long said that structure is a big reason why Magna, the world's No. 3 auto parts maker, trades at a sizable discount to its peers.

The OSC called the hearing after several shareholders complained that while they applaud the move to a "one share, one vote" structure, the payout to Stronach and the dilution of equity would be unreasonably high.

On Friday the OSC said a group of heavy-hitting investors that together own over 4 percent of Magna could address certain issues at the hearing together with the OSC staff, but could not lead evidence or cross-examine witnesses.

The group, which their lawyer said represents the "don't hold your nose and vote yes camp," is made up of Ontario Teachers Pension Plan, Ontario Municipal Employees Retirement System, Canada Pension Plan Investment Board, British Columbia Investment Management Corporation, Alberta Investment Management Corporation, and Letko, Brosseau & Associates Inc.

They want Magna to provide shareholders with a statement of fairness on the deal by a financial adviser, and they want Magna's board to give a recommendation -- something it has so far refused to do.   Continued...