Magna Creates New Shares for Gaming Unit

Canadian auto parts maker Magna International Inc. on Monday created a new class of exchangeable shares for its gaming division, which owns a number of North American racetracks, including Santa Anita Park.

The company also named Michigan banker Jerry Campbell to lead the unit and appointed directors for the new company, including MGM Grand Chairman J. Terrence Lanni. Campbell was chairman and chief executive of Republic Bancorp Inc., a small banking company based in Owosso, Mich. He has served as chairman of Great Lakes Downs, a Muskegon, Mich., racetrack that Magna acquired Monday.

Magna also set late February to early March for the long-awaited spinoff of its entertainment branch, a relief to investors solely interested in the cyclical auto parts industry.

Magna’s gaming unit, which will be called MI Entertainment Corp., had revenue of $133.6 million in the eight months ended Aug. 31. At racetracks such as Santa Anita Park in Arcadia, the company hopes to build “destination” tourism centers, including multiplex theaters, shops and hotels.

MI Entertainment, which will also own Golden Gate Fields racetrack near San Francisco, Gulfstream Racetrack in Florida, Thistledown Racetrack in Ohio and Remington Park racetrack in Oklahoma, will face competition from Churchill Downs Inc. and Penn National Gaming.

Magna, led by Chairman Frank Stronach, said last year that it will distribute 20% of the unit to stockholders after concern about its gaming portfolio helped depress Magna shares. Magna hopes Campbell’s gaming and managerial credentials will make the shares more marketable.

David Mitchell, until recently senior vice president of Caesars World Inc., will serve as MI Entertainment’s chief financial officer.

Magna also hopes Monday’s announcements will boost demand for its shares, which dropped 24% last year. On Friday, shares closed at $45.44, down 50 cents, on the New York Stock Exchange.