DBRS Comments on Potential Acquisition of MID Shares by ST Acquisitions Corp.

DBRS notes today that MI Developments Inc. (MID or the Company) has been advised by ST Acquisition Corp. (STAC), a corporation controlled by members of the Stronach Family, that it intends to acquire any or all of the outstanding Class A Subordinate Voting Shares and Class B Shares of MID that it does not already own at a price of US$13.00 per share in cash.

STAC and its affiliated and associated entities currently own an aggregate of 50,000 Class A Subordinate Voting Shares and 383,414 Class B Shares of MID, which together represent approximately 60% of the total voting power of the Company’s outstanding shares.

While the intention of STAC and its affiliated and associated entities to increase their ownership stake in MID does not have immediate credit implications for the Company, should STAC gain 100% control of MID, the Company could be privatized, which could have negative implications for bondholders.

DBRS, however, notes that the current financial covenants for MID’s BBB-rated Senior Unsecured Debentures are somewhat more restrictive compared with other real estate entities rated by DBRS. DBRS will continue to monitor future events and any events that could have credit implications will be considered at the time they occur.

Note:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Real Estate, which can be found on our website under Methodologies.