Magna machinations: Frank's new trick

[SentToStud]

Originally Posted by Kasept

A remarkable few days for those that enjoy the Magna sideshow with Stronach yet again finding a way to wrangle money (another $40 million) out of his auto parts business. David Einhorn (Greenlight Capital) screaming again about the outrageous tactics and brazen behavior of Stronach.. Below find 4 pieces that will help you understand the sad and bizarre failure Magna Entertainment is.

To understand the players:

A.) Magna Entertainment Corp (MEC): Stronach Racing-related business

B.) Magna Development Inc (MDI): Holding company created by Frank to lend money to MEC and manage real estate/lease property to Magna Industries entities. The entity Greenlight invested in and complains is failing to provide value to shareholders by fatuously pandering to failed MEC needs.

C.) Magna Industries (MI): Original, highly successful and financially stable Stronach auto parts business.


GLOBE & MAIL STORY ON PROPOSED DEAL:
http://www.theglobeandmail.com/servl...Story/Business


MAGNA PRESS RELEASE ON THE DEAL:
http://www.shareholder.com/MID/NEWS/20080331-302190.pdf


GREENLIGHT CAPITAL PRESS RELEASE OBJECTING TO DEAL:
http://money.aol.com/news/articles/_...02084709990013


NATIONAL POST STORY GIVING BACKGROUND ON MI EXECS DISPLEASURE WITH MEC:
http://www.financialpost.com/story.html?id=415244

There are 5 major institutional inverstors in Magna Dev. Their percantages of total Mag Dev stock range from 14% to 8%. Greenlight owns 10%.

How come the other major sh holders aren't barking as well?

According to Magna's response today, Greenlight has been been "attampting to impose its views" since 2003, when Magna Dev spun off.

You have to ask why Greenlight has stuck it out so long, as Stronach has been feeding money into MEC for years? It's interesting that the initial stock price was about $18/sh and as recently as 10 months ago traded as high as $39/sh. so, over those 4 years ending 10 months ago, Einhorn's initial $80 million turned into $190 million.

That's not bad. But, the stock has been beat hard the last 10 months and that $190M is now $130M. Maybe that's what's got Einhorn especially po'd?

The second most interesting fact is that the five biggest inverstors Magna Dev holdings represent the following percentages of their OWN firm's portfolios:
0.8%, 0.9%, 1,7%, 1.7% and 5.0%.

The 5.0% is Greenlight. Einhorn certainly does have a lot of his eggs stamped Magna.

The most interesting fact is that upon news of the proposed restructuring, Magna Dev stock rose 16% in a day which addded just under $200,000,000 in value to the company's stock.

SOMEBODY liked the reorg plan.