(Magna story updated with additional details on views of the plan and closing stock price.)
NEW YORK (TheStreet) -- Magna International's (MGA) - Get Report proposal to eliminate the company's dual class share structure could face roadblocks from the Ontario Securities Commission (OSC), which will convene a hearing to decide whether allowing the plan to proceed would be in the public's interest.
Magna says it will address the concerns of the OSC, but maintains that it has already provided complete disclosure of the plan. "We do not believe any additional information we might disclose will change shareholders' views of the value this transaction can unlock for holders of Magna's Class A shares," Magna CFO Vincent Galifi says in a written statement.
reported, two large pension funds have already criticized the plan, which would pay Frank Stronach -- founder of the world's No. 3 auto parts company -- almost $900 million to relinquish control of the company. The pension funds, the Canada Pension Plan Investment Board and the Ontario Teachers' Pension Plan, believe that the pay-off to Stronach would be unreasonable.
Meanwhile, OSC staff believe that Magna's plan is "contrary to the public interest and harmful to the integrity of the Ontario capital markets," according to
. The OSC announced its decision to convene a June 23 hearing on Tuesday. There will also be a preliminary appearance on June 18.
Magna shareholders are expected to vote on the proposal at an investor meeting on June 28. "Based on all of our discussions to date, the vast majority of Magna's shareholders are having no difficulty in understanding the transaction," according to Galifi. "Moreover, the market reaction has been very positive, indicating that most shareholders view the transaction as one that enhances value for them."
Magna says that more than 24% of its shares outstanding have been voted so far, with more than 99% voting in favor of the plan.
Since the proposal was announced on May 6, through the market close on June 15, Magna's shares have traded up 14.2% on the New York Stock Exchange, compared with a loss of 4.3% for the S&P 500 Index in the same period, and a loss of 1% with respect to Magna's U.S. peers, consisting of
American Axle & Manufacturing
( ARM), the company notes.
Shares of Magna fell 5.2% to $67.76 at the closing bell.
Top Three Green Cars to Watch in 2010
Click here for green cars to watch.
-- Reported by Andrea Tse in New York
>>Top Three Green Cars to Watch in 2010
Follow TheStreet.com on
and become a fan on
Copyright 2010 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.