A potential windfall payout to Frank Stronach is on hold after a Canadian regulatory body objected to plans to restructure the ownership of Magna International.
The Ontario Securities Commission, Canada's main stock market regulator, last week said the Aurora, Ontario, supplier must give shareholders more information about the proposed transaction, according to wire service reports.
In the original deal, Magna would have paid a trust controlled by Stronach, the company's 78-year-old founder and chairman, nearly $900 million to give up a special class of shares that grants the trust voting control. Part of the deal would have created a joint venture controlled by Stronach to build and supply electric vehicles.
Earlier last week, Magna said a majority of shareholders already had voted in favor of the plan. Magna investors are expected to see the price of their shares go up if the supervoting shares held by the Stronach Trust are eliminated.
FAIR Canada, an investors' rights organization, objected to the deal, saying the trust would receive an 1,800 percent premium for its stock and would, in effect, be rewarded for having minimized until now the value of other shareholders' stock.
Magna CFO Vincent Galifi said the company would work with the commission to disclose more information to shareholders. A shareholder vote that had been scheduled for today, June 28, will be rescheduled.
Of course, if the deal dies, Stronach doesn't get the cash but remains Magna's chairman and controlling shareholder.