Magna cancels debt-transfer plan

MI Developments, the parent company of Magna Entertainment Corp., announced it has cancelled a July 24 shareholder vote on a complex proposal to transfer hundreds of millions of dollars of Magna's debt to a jointly owned company.

Though MI Developments said that the vote may take place in the future, the cancellation is an indication that the proposal is suffering setbacks. Two large institutional shareholders had indicated that they opposed the plan when it was first announced in late April. The two firms, Greenlight Capital and Hotchkis and Wiley Capital Managment, both have the power to block the deal.

Magna, which has lost $500 million over the past five years, owes its parent company $247 million. The proposal would have transferred that debt to a company owned by Magna and MI Developments, plus send $150 million in cash to Magna to shore up its financial condition.