TORONTO (CP) -- Magna International Inc. is postponing a shareholder vote on a controversial plan that would offer founder Frank Stronach nearly $1 billion in stock, cash and other incentives to give up his voting control of the company.
The company had planned to hold a vote on Monday but says the shareholders meeting will be postponed so Magna can provide more information to shareholders, in light of a regulatory ruling late Thursday.
The Ontario Securities Commission said that Magna hadn't provided enough information to shareholders so they could decide how to vote on a proposed change to the company's capital structure.
The commission agreed with Magna that shareholders should be allowed to vote on the plan, but disagreed with the company's assertion that it had disclosed sufficient information already.
"We intend to work cooperatively with the OSC staff to address the commission's concerns and comply with the OSC's additional disclosure requirements," Vincent Galifi, Magna's chief financial officr, said in a statement Friday.
"We welcome the commission's position that shareholders should decide the outcome of the transaction. We will work to bring the proposed transaction back to our shareholders for consideration in an expeditious manner."
The deal proposed by Magna would see Stronach receive US$300 million in cash, nine million common shares and control over a joint venture that will develop components for electric vehicles.
In exchange, Stronach would give up his special class of shares and Magna would also phase out millions of dollars in consulting fees currently paid to Stronach.
The company hasn't announced a new date for the vote but Magna still has until Aug. 31 until the proposal expires.
Based on Thursday's share price, the deal was valued at about $970 million -- an "unprecedented" premium, according to the Ontario Securities Commission.
The OSC appointed an independent panel to hear the issue this week after the regulator called the proposal "contrary to the public interest and harmful to the integrity of the Ontario capital markets." The OSC said Magna needs to provide shareholders with several pieces of information before they can make an informed decision, including an opinion on the fairness of the deal and information on how the company arrived at the amount to be paid to Stronach.
Shareholders who support the deal say it will unlock a significant amount of value in Magna's stock, which has traded lower than its peers because of the company's dual-class share structure. Dual-class structures tend to scare away some investors because they don't give common shareholders control over how the company is run.
The Stronach Trust, consisting of Stronach and his family, indirectly owns all the 726,829 outstanding class B shares in the company. Each of the super-voting shares has 300 votes, giving the family-controlled trust about 66 percent of the voting rights at Canada's largest auto parts company.
Magna said a solid majority -- 57.4 percent -- of its total outstanding shares had already been voted in favour of the proposal as of Wednesday night.
Shares in Magna added 56 cents to $73 in Thursday trading on the Toronto Stock Exchange.