July 23, 2010
(Magna) and the Stronach Trust at today's Magna shareholder meeting.
We find the Magna Board's refusal to state whether or not the proposed agreement is ‘fair' to shareholders, highly unusual. We will continue to be vigilant on corporate governance issues that set an untenable precedent. To that end, we will join other shareholders to oppose the proposed arrangement at the Ontario Superior Court of Justice fairness hearing, scheduled to take place on August 12 and 13.
Magna's proposed arrangement is excessive, unprecedented and unfair to shareholders. Our primary concerns are as follows:
- The directors of Magna failed to exercise their fiduciary obligation to proceed with this arrangement only if they believe it is in the long term best interests of the corporation. Instead, the directors declined to make any recommendation before asking shareholders, and subsequently the Court, to decide whether the proposed arrangement is fair and reasonable.
- The 1,800 per cent premium being paid to the Stronach Trust to eliminate Magna's multiple-voting share structure and the resulting dilution to the subordinate shareholders, exceed by many times what has occurred in any previous arrangement.
- If successful, the proposed arrangement would establish the same dual-class structure for the electric-car venture that Magna currently is trying to eliminate.
Director, Communications and Media Relations
Ontario Teachers' Pension Plan