Magna International Inc.

Magna Announces Special Stock Dividend Of Magna Entertainment Corp. Class A Subordinate Voting Stock And Cash Dividend

Aurora, ON. (ots-PRNewswire) - Magna International Inc. (TSE: MG.A, MG.B; NYSE:MGA) and Magna Entertainment Corp. (formerly MI Entertainment Corp.), Magna's non-automotive subsidiary, has announced that the Form S-1 Registration Statement for Magna Entertainment Corp. ("MEC") has been declared effective by the United States Securities and Exchange Commission and that MEC and MEC Holdings (Canada) Inc. ("MEC Canada") have filed their final non-offering prospectus with the various provincial securities commissions in Canada. This permits Magna to proceed with its previously announced plan to create a new public company out of its non-automotive operations by distributing approximately 20% of MEC's Class A Subordinate Voting Stock to Magna's shareholders. In order to effect the distribution of MEC Class A Subordinate Voting Stock, the Magna Board of Directors has declared a special stock dividend payable at 4:59 pm on March 10, 2000 (the "Dividend Distribution Date") to the holders of Magna's issued and outstanding Class A Subordinate Voting Shares and Class B Shares on the basis of one-fifth (1/5) of one share of MEC Class A Subordinate Voting Stock for each Magna Class A Subordinate Voting Share and each Magna Class B Share to shareholders of record at 5:00 pm on February 25, 2000 (the "Dividend Record Date"), subject to applicable Canadian federal withholding taxes and to any required approvals of The Toronto Stock Exchange ("TSE") and The New York Stock Exchange ("NYSE"). Magna shareholders resident in Canada will concurrently receive Exchangeable Shares in MEC Canada, which qualify as Canadian property in satisfaction of their entitlement to receive MEC Class A Subordinate Voting Stock on completion of the special stock dividend unless such residents elect otherwise in writing by March 7, 2000. All registered Magna shareholders will receive from the distribution agent, Montreal Trust Company of Canada, a copy of the final Registration Statement in the case of U.S. and foreign resident shareholders, and a final non-offering prospectus together with an election form in the case of Canadian resident shareholders. In lieu of distributing fractional shares, Magna will pay to holders of its Class A Subordinate Voting Shares and Class B Shares on the Dividend Record Date an amount equal to the fair market value, based on the 10-day weighted average trading price of the MEC Class A Subordinate Voting Stock in the "if, as and when issued" trading market prior to the Dividend Distribution Date, of any fractional shares such shareholders would otherwise receive upon distribution of the special stock dividend. For more information regarding the mechanics of and other matters related to the distribution refer to the attached Questions and Answers About The Distribution. Magna shareholders should also refer to the final Registration Statement or Non-Offering Prospectus being provided by Montreal Trust Company of Canada following the Dividend Record Date. Magna's Board of Directors has also declared its regular cash dividend of US $0.30 per share with respect to its outstanding Class A Subordinate Voting Shares and Class B Shares for the fiscal quarter ended December 31, 1999 payable concurrently with the special stock dividend at 4:59 pm on the Dividend Distribution Date to shareholders of record at 5:00 pm on the Dividend Record Date. Canadian federal withholding taxes for Magna shareholders not resident in Canada for both the cash dividend and the special share dividend will be deducted from the cash dividend. As previously announced, Mr. Jerry D. Campbell will join MEC as President and Chief Executive Officer upon the successful completion of MEC's purchase of Great Lakes Downs of which he is Chairman and a significant shareholder. Mr. David A. Mitchell will become Executive Vice-President and Chief Financial Officer. They will join Mr. Lonny T. Powell, the current Executive Vice-President, Racetrack Operations, in managing the operations of MEC. Messrs. Campbell, Mitchell and Powell all have extensive experience in the horse racing and gaming industry. Prior to the completion of the distribution of the shares of MEC Class A Subordinate Voting Stock and Exchangeable Shares of MEC Canada to Magna's Class A Subordinate Voting and Class B shareholders, MEC will elect Messrs. Jerry D. Campbell, William G. Davis, Peter M. George, Joseph W. Harper, J. Terrence Lanni, Edward C. Lumley, Earle I. Mack, Gino Roncelli, Andrew Stronach, Ronald J. Volkman and John C. York II as directors of MEC, in addition to Mr. Frank Stronach and Mr. James Nicol. Unfortunately, Mr. Glen W. Schaeffer has recently indicated that he will be unable to serve as a MEC director. MEC plans to elect an additional outside director to its Board of Directors to replace Mr. Schaeffer. Also as previously announced, Magna confirmed the method by which the conversion price of its two outstanding series of convertible subordinated debentures, the 5% Convertible Subordinated Debentures due 2002 and 4.875% Convertible Subordinated Debentures due 2005, will be adjusted due to the special stock dividend of MEC Class A Subordinate Voting Stock. Effective as of the Dividend Record Date, the conversion price for such debentures shall be adjusted by multiplying the conversion price then in effect by the following fraction: (No. of Magna Class A Shares outstanding on the Record Date X Current Market Price on Record Date) - Fair Market Value of MEC Class A Stock --------------------------------------------------------------------- (No. of Magna Class A Shares outstanding on the Record Date X Current Market Price on Record Date) The Current Market Price of a Magna Class A Subordinate Voting Share on the Dividend Record Date for purposes of calculating the above fraction will be based on the weighted average trading price of Magna Class A Subordinate Voting Shares on the NYSE for the 20 consecutive trading days ending on the third trading day prior to the Dividend Record Date. The Fair Market Value of the MEC Class A Subordinate Voting Stock for purposes of calculating the numerator of the above fraction will be calculated on the basis of the 10-day weighted average trading price of shares of the MEC Class A Subordinate Voting Stock on NASDAQ in the "if, as and when issued" trading market for the ten consecutive trading days prior to the Dividend Distribution Date, multiplied by the number of shares of such MEC Class A Subordinate Voting Stock distributed as part of the special stock dividend. No adjustment will be made that would result in any increase in the conversion price. As a result of this calculation, there will be a period during which the adjustment to the conversion price will be in effect, but not determinable. Conversion requests during this period will be treated as effective on the date of surrender. Surrendering debentureholders will be entered in Magna's books as the holder of such number of Magna Class A Subordinate Voting Shares as such person would have been entitled to receive but for the adjustment. After the determination of the adjustment, Magna will determine the number of additional Magna Class A Subordinate Voting Shares debentureholders are entitled to receive. Such debentureholders will be entered in Magna's books as the holder of these additional shares effective as of the date of surrender. The TSE has conditionally approved the listing of MEC's Class A Subordinate Voting Stock as well as the Exchangeable Shares of MEC Canada under the symbols MIE.A and MEH, respectively. The Nasdaq Stock Market, Inc. has also approved the listing of MEC's Class A Subordinate Voting Stock under the symbol "MIEC" subject to the satisfaction of certain conditions. Magna, one of the most diversified automotive suppliers in the world, designs, develops and manufactures automotive systems, assemblies and components, and engineers and assembles complete vehicles, primarily for sale to original equipment manufacturers of cars and light trucks in North America, Europe, Mexico, South America and Asia. Magna's products include: exterior decorative systems; interior products including complete seats, instrument and door panel systems and sound insulation; stamped and welded metal parts and assemblies; sunroofs; electro-mechanical devices and assemblies and navigation systems; a variety of plastic parts, including body panels and fascias through Decoma International Inc.; various engine, powertrain and fueling and cooling components through Tesma International Inc.; and a variety of drivetrain components and complete vehicle engineering and assembly through the Steyr-Daimler-Puch Group. Magna has over 58,000 employees in 164 manufacturing operations and 30 product development and engineering centres in 19 countries. Questions And Answers About The Distribution Q: What Is The Purpose Of The Distribution? A: Magna International Inc. is separating its non-automotive businesses from its automotive businesses in a series of transactions. Magna has completed a reorganisation in which it transferred its North American and European non-automotive assets to us in exchange for our Class B Stock. Magna also holds Exchangeable Shares. On March 10, 2000, Magna will distribute to holders of its Class A Subordinate Voting Shares and Class B Shares of record on February 25, 2000, by way of special dividend, approximately 15.7 million shares comprised of our Class A Subordinate Voting Stock and Exchangeable Shares. Subject to Canadian federal income tax withholding requirements in respect of shareholders not resident in Canada, Magna will concurrently distribute to its shareholders of record on February 25, 2000, its regular quarterly cash dividend of $0.30 per Magna share. Magna will not continue to hold any of our Class A Subordinate Voting Stock, but may continue to hold Exchangeable Shares. Upon completion of these transactions, you will own stock in two separately traded public companies, Magna International Inc. (NYSE: MGA; TSE: MG.A, MG.B) and either Magna Entertainment Corp. (NASDAQ: MIEC; TSE: MIE.A) or Exchangeco (TSE: MEH). Q: What Will I Receive When The Special Dividend Is Distributed? A: Subject to Canadian federal income tax withholding requirements in respect of shareholders not resident in Canada, you will receive one-fifth of one share of our Class A Subordinate Voting Stock for each Magna Class A Subordinate Voting Share and Magna Class B Share that you own of record on February 25, 2000, rounded down to the nearest whole share, plus an amount of cash equal to the value of any fractional interest. If you are a Magna shareholder resident in Canada, you will, unless you elect otherwise, receive one-fifth of one Exchangeable Share for each Magna Class A Subordinate Voting Share and Magna's Class B Share that you own of record on February 25, 2000, rounded down to the nearest whole share, plus an amount of cash equal to the value of any fractional interest. The distribution will not change the number of Class A Subordinate Voting Shares or Class B Shares of Magna that you own. Q: What Will Your Business Be After The Distribution? A: We will continue to acquire, develop and operate horse racetracks and related pari-mutuel wagering operations. As a complement to our horse racing business, we will explore the development of media sports wagering operations, including telephone account, interactive television and Internet-based wagering, as well as leisure and retail-based real estate projects on the land surrounding some of our racetracks, possibly in conjunction with business partners and subject to regulatory requirements. In addition, we will continue to own a real estate portfolio which includes a gated residential community currently under development, a golf course and related recreational facilities, a golf course under development and other real estate. We are currently considering a variety of options with respect to the golf courses, including direct operation or leasing to third party operators, as well as sale and leaseback transactions or outright sale. We intend gradually to sell the balance of our real estate portfolio in order to provide capital to be used in our business; accordingly, we will take steps including servicing this land and obtaining zoning approval to enhance the value of the properties and increase the revenues from resale. Q: What Will Magna's Business Be After The Distribution? A: Magna will continue to be the largest Canadian, and one of the largest global, independent suppliers of technologically advanced automotive components, systems and complete modules. Magna will continue to design, engineer and manufacture a complete range of these vehicle systems and engineer and assemble low volume niche vehicles primarily for North American and European original equipment manufacturers. Q: Why Is Magna Distributing Shares Of Your Class A Subordinate Voting Stock? A: Magna's board of directors and management has determined that, because our business is not one of Magna's core businesses, we and Magna will be better able to develop and grow our respective businesses after we become a separate public company. Q: What Will Be The Impact Of The Distribution On Magna's Share Price? A: The prices of Magna Class A Subordinate Voting Shares and Magna Class B Shares may decline upon completion of the distribution to the extent that the value of shares of our Class A Subordinate Voting Stock and the Exchangeable Shares that Magna is distributing to its shareholders has not already been factored into the prices of Magna's shares. However, since the separation will permit Magna to focus on its core automotive business, Magna has advised us that its management expects prices of Magna's shares to improve as a result of the separation. Q: What Do I Have To Do To Participate In The Distribution? A: If you are a registered or beneficial shareholder of Magna resident in the United States, you do not need to do anything to participate in the distribution. No proxy or vote is required to participate in the distribution. You do not need to, and should not, mail in any certificates representing Magna Class A Subordinate Voting Shares or Magna Class B Shares in order to receive our Class A Subordinate Voting Stock in the distribution. If you are a registered or beneficial shareholder of Magna resident in Canada and you wish to receive Exchangeable Shares, you do not need to do anything to participate in the distribution. If you are a registered shareholder of Magna resident in Canada and you would prefer to receive shares of our Class A Subordinate Voting Stock, please let the distribution agent know no later than March 7, 2000 by following the instructions enclosed with this prospectus. If you are a beneficial shareholder of Magna resident in Canada and you would prefer to receive shares of our Class A Subordinate Voting Stock, you should advise the registered holder of your Magna shares no later than March 6, 2000. Q: How Will Magna Distribute Your Class A Subordinate Voting Stock To Me? A: If you are a registered holder of Magna Class A Subordinate Voting Shares or Magna Class B Shares as of the close of business on the record date for the distribution, Magna's distribution agent will automatically credit the number of shares of our Class A Subordinate Voting Stock or Exchangeable Shares to which you are entitled to a book-entry account established to hold the stock for you, subject to Canadian federal income tax withholding requirements in respect of shareholders not resident in Canada. This credit will occur on the distribution date. After the distribution date, the distribution agent will mail you a statement of your ownership of our Class A Subordinate Voting Stock or the Exchangeable Shares. Following the distribution, you may retain your shares of our Class A Subordinate Voting Stock or the Exchangeable Shares in your book-entry account, sell them or transfer them to a brokerage or other account. You will not receive any new stock certificates in the distribution. However, if you are a registered holder, you may request a physical stock certificate after you receive the statement of ownership of our Class A Subordinate Voting Stock or the Exchangeable Shares from the distribution agent. The statement of ownership will contain instructions on how to do this. Q: What If I Hold My Magna Shares Through My Stockbroker, A Bank Or Other Nominee? A: If you hold your Magna Class A Subordinate Voting Shares or Magna Class B Shares through a stockbroker, bank or other nominee, you are probably not a registered shareholder of record and the manner in which you receive our Class A Subordinate Voting Stock or the Exchangeable Shares depends on your arrangements with the stockbroker, bank or other nominee that holds your Magna Class A Subordinate Voting Shares or Magna Class B Shares for you. We expect that stockbrokers and banks generally will credit their customers' accounts with our stock on or after the distribution date, but you will have to confirm that with your stockbroker, bank or other nominee. After the distribution, you may instruct your stockbroker, bank or other nominee, subject to any arrangement you may have with that person, to transfer your Class A Subordinate Voting Stock or Exchangeable Shares into your own name to be held in book-entry form. Q: What About Fractional Shares? A: If you are the registered holder of a number of Magna Class A Subordinate Voting Shares or Magna Class B Shares not evenly divisible by five, you will receive cash equal to the fair market value (as determined by Magna) of the fractional share of our Class A Subordinate Voting Stock or the Exchangeable Shares you would have otherwise been entitled to receive in addition to any whole shares of our Class A Subordinate Voting Stock or the Exchangeable Shares you are entitled to receive. Magna will determine the fair market value of these fractional shares on the basis of the 10-day weighted average trading price of our Class A Subordinate Voting Stock in the "if, as and when issued" market prior to the distribution date. Q: On Which Stock Exchange Will Shares Of Your Class A Subordinate Voting Stock And The Exchangeable Shares Trade? A: Our class A Subordinate Voting Stock has been approved for quotation and listing on NASDAQ under the trading symbol "MIEC". The Toronto Stock Exchange has conditionally approved the listing of our Class A Subordinate Voting Stock and the Exchangeable Shares under the trading symbols "MIE.A" and "MEH", respectively, subject to the fulfilment by us of the requirements of The Toronto Stock Exchange on or before May 8, 2000. Q: When Will I Be Able To Buy And Sell Your Class A Subordinate Voting Stock And The Exchangeable Shares? A: Regular trading of our Class A Subordinate Voting Stock is expected to begin on NASDAQ and The Toronto Stock Exchange on the distribution date. Prior to that, our Class A Subordinate Voting Stock is expected to trade on NASDAQ and The Toronto Stock Exchange on an if, as and when issued basis under the trading symbols "MIECV" and "MIE.W", respectively, beginning on the date that is two trading days before the record date. Regular trading of the Exchangeable Shares is expected to begin on The Toronto Stock Exchange on the distribution date. Prior to that, the Exchangeable Shares are expected to trade on The Toronto Stock Exchange on an if, as and when issued basis under the trading symbol "MEH.W" beginning on the date that is two trading days before the record date. Q: How Will I Be Able To Buy And Sell Magna Class A Subordinate Voting Shares Before The Distribution Date? A: Magna has advised us that its Class A Subordinate Voting Shares will continue to trade on The New York Stock Exchange on a regular basis through the distribution date and that its Class A Subordinate Voting Shares and Class B Shares will trade on The Toronto Stock Exchange on an "ex-dividend" basis beginning on the date that is two trading days before the record date. Any Magna Class A Subordinate Voting Share sold on a regular basis on the New York Stock Exchange beginning on the date that is two trading days before the record date and ending on the distribution date will be accompanied by an attached due bill representing your shares of our Class A Subordinate Voting Stock to be distributed in the distribution. Q: Will My Dividends Change As A Result Of The Distribution? : Before the distribution, Magna was paying a quarterly dividend of $0.25 per Magna Class A Subordinate Voting Share and Magna Class B Share, which is equivalent to an annual rate of $1.00 per Magna Class A Subordinate Voting Share and Magna Class B Share. The board of directors of Magna will be responsible for determining Magna's dividend rate and policy after the distribution, subject to the terms of Magna's Corporate Constitution. We do not anticipate paying any dividends until our fiscal year commencing January 1, 2004. Our Corporate Constitution, which is set forth in our Certificate of Incorporation, provides that holders of our Class A Subordinate Voting Stock and Class B Stock will be entitled to receive dividends at least equal to 10% of our after-tax profits for our fiscal years commencing January 1, 2004 and 2005. In respect of each fiscal year thereafter, holders of our Class A Subordinate Voting Stock and Class B Stock will be entitled to receive dividends at least equal to the greater of (i) 10% of our after-tax profits, and (ii) 20% of the average of our after-tax profits for that fiscal year and the two immediately preceding fiscal years. Our board of directors will be responsible for determining our dividend rate and policy after the distribution, subject to the terms of our Corporate Constitution. Q: Will I Be Taxed As A Result Of The Distribution? A: Yes. The distribution of shares of our Class A Subordinate Voting Stock and the Exchangeable Shares will be treated as a taxable dividend for purposes of Canadian and United States federal income taxation. Canadian resident shareholders will be subject to tax on the fair market value of the distribution (which will include the fair market value of the shares of our Class A Subordinate Voting Stock or the Exchangeable Shares, as the case may be, the amount of cash in lieu of fractional shares and the amount of the concurrent Magna regular quarterly cash dividend). Accordingly, Canadian resident shareholders may be liable for tax under the Income Tax Act (Canada) without having received a cash payment sufficient to satisfy that tax liability. The distribution paid to non-residents of Canada will be subject to Canadian withholding tax on its fair market value, at the time the distribution is paid. If you are a United States resident shareholder of Magna, the rate of Canadian withholding tax should generally be 15%, which may in some circumstances be claimed as a credit or deduction on your United States income tax return. This withholding tax will be satisfied by Magna withholding the required amount from the concurrent Magna regular quarterly cash dividend and, if necessary, withholding some portion of the shares of our Class A Subordinate Voting Stock otherwise distributable. Q: What Will The Relationship Between You And Magna Be After The Distribution? A: Upon completion of the distribution, Magna will own all our Class B Stock and none of our Class A Subordinate Voting Stock. Holders of our Class A Subordinate Voting Stock are entitled to one vote per share, holders of our Class B Stock are entitled to 20 votes per share and all holders vote together as a single class, except where separate class votes are required by law or by our Certificate of Incorporation. Accordingly, Magna will be entitled to exercise approximately 99% of the total votes attached to all our outstanding stock. Magna will therefore continue to be able to elect all our directors and continue to control us. Magna has informed us that after the distribution it intends to convert some shares of our Class B Stock to shares of our Class A Subordinate Voting Stock and dispose of these shares of our Class A Subordinate Voting Stock when market conditions for doing so are favorable, with the ultimate intention of retaining only a minority equity position but continuing to retain control. This may occur through a combination of: (i) secondary sales by Magna of shares of our Class A Subordinate Voting Stock held by it; and/or (ii) the dilution of its interest through the issuance of Class A Subordinate Voting Stock by us in connection with capital market transactions, acquisitions and/or other investments by business partners in us. Magna has made a commitment to its shareholders that for a period of seven years ending May 31, 2006, it will not without the prior consent of the holders of a majority of Magna's Class A Subordinate Voting Shares: (i) make any further debt or equity investment in us or any of our subsidiaries; or (ii) invest in any non-automotive-related businesses or assets other than through its investment in us. Magna is currently paying us an access fee to access our Fontana Sports golf course and related recreational facilities in Austria for Magna-sponsored corporate and charitable events and business development purposes. Upon completion of our golf course in Aurora, Ontario, Magna will pay us an annual access fee for similar purposes. We have also granted Magna a right of first refusal to purchase these two golf courses if we decide to sell them. Q: Why Are You Offering Canadian Shareholders The Alternative Of Receiving Exchangeable Shares Of Your Canadian Subsidiary? A: Some Canadian resident shareholders of Magna may be subject to restrictions on their ability to hold foreign property under the Income Tax Act (Canada), and may not wish to receive shares of our Class A Subordinate Voting Stock in the distribution. By providing Canadian holders with the alternative of receiving Exchangeable Shares issued by Exchangeco instead of our Class A Subordinate Voting Stock, they will have the opportunity to receive shares of a Canadian issuer that are not foreign property under the Income Tax Act (Canada), provided the Exchangeable Shares are listed on a prescribed stock exchange in Canada, which includes The Toronto Stock Exchange. The Exchangeable Shares, together with ancillary rights, are economically equivalent to shares of our Class A Subordinate Voting Stock. If not previously converted by the holders, the Exchangeable Shares may be redeemed by Exchangeco for an equal number of shares of our Class A Subordinate Voting Stock on or after October 1, 2001. Q: Whom Should I Contact For Further Information On The Distribution? A: If you have questions about the distribution or if you would like additional copies of this prospectus or any other document to which this prospectus refers, you should contact the Secretary of Magna at 337 Magna Drive, Aurora, Ontario, Canada L4G 7K1, telephone: +1 (905) 726-7022. This prospectus is also available through the Internet on the Electronic Data Gathering, Analysis and Retrieval (EDGAR) system, which can be accessed at www.sec.gov/edgarhp.htm for U.S. shareholders, and on the System for Electronic Document Analysis and Retrieval (SEDAR), which can be accessed at www.sedar.com for Canadian shareholders. ots Originaltext: Magna International Internet: http://www.newsaktuell.de Contact: Brian Colburn, Executive Vice-President, Special Projects of Magna at Tel. +1 905-726-7022. Copies of the Registration Statement can be accessed through the Internet in the U.S. through the EDGAR system at www.sec.gov/edgarhp.htm and the Final Non-Offering Prospectus in Canada through SEDAR at www.sedar.com. Original-Content von: Magna International Inc., übermittelt durch news aktuell

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