MONTREAL- The third recall of a Mega Brands magnetic toy has dealt the struggling toymaker an especially painful blow as it marks the first time that the product's faulty design can't be blamed on the previous owners.

The Montreal-based company recalled two Chinese-made pre-school magnetic toys Monday after receiving a series of complaints about tiny magnets dislodging from their plastic casings.

The move sent its battered shares close to a 52-week low as they lost nearly 14 per cent, or 71 cents to close at $4.40 on the Toronto Stock Exchange. Over the past year, shares have fallen from $26.87 to a low of $4.21.

The "voluntary'' recall of 2.4 million units covers MagnaMan action figures and Magtastik and Magnetix Jr. pre-school toys. Unlike the two recalls in 2006 and 2007 of Magnetix construction sets, the Magtastik and Magnetix Jr. pre-school toys were designed by Mega Brands.

The company said magnets in small flexible parts can detach and, if swallowed, can attract each other and cause intestinal perforations or blockages.

"They are flexible. If you bend it enough the magnet can pop out,'' Mega Brands spokesman Harold Chizick said in an interview.

Mega Brands said it and the U.S. Consumer Product Safety Commission are aware of 44 reports in the United States of magnets coming loose, including one case of a three-year-old boy receiving medical treatment to remove a magnet from his nose and a report of an 18-month-old found with a magnet in his mouth but not swallowed.

The newly recalled products were produced as early as 2004. But Magtastik and its similar Magnetic Jr. set were designed following the 2005 US$350 million acquisition of Rose Art Industries.

The company redesigned its Magnetix building system after one child died and several others were seriously injured after ingesting a baby Aspirin-sized magnet.

The two earlier recalls cost tens of millions of dollars in expenses and litigation, and ravaged the company's share price. The new product known as MagNext in which magnets are encapsulated in the plastic shells is set to hit store shelves this summer.

In the case of the new recall, consumers are being instructed to return the affected toys to Mega Brands for a free replacement toy.

The products are no longer in production but the company asked retailers two weeks ago to remove Magtastik and Magnetic Jr. toys from store shelves.

"While we investigated the complaints, we asked retailers to pull the products from shelves and once we realized that there was an issue we took this very cautious step of announcing a voluntary recall,'' Chizick said.

Monday's recalled products were sold at toy stores around Canada and the United States, including Wal-Mart and Toys "R'' Us between January 2005 and December 2007. They retailed for between $10 and $40.

The recalled products represented sales of $7 million last year. Costs related to the recalls will be reflected in fourth quarter 2007 financial results, that are slated to be released March 31.

Patty Davis of the Consumer Product Safety Commission said Mega Brands isn't the only toymaker to recall its magnetic toys. However, she said there are no plans to ban the toy because of continuing problems.

"We are working with the voluntary standards community here in the United States to redesign these toys so the magnets don't fall out as easily,'' she said in an interview from Maryland.

Davis wouldn't say when the organization first received complaints about the product, but noted it moved "expeditiously'' to issue a recall.

Chizick also wouldn't shed light on the timing of the complaints and couldn't say if the company faces any lawsuit.

"We've received 44 consumer complaints over the last few years about these products and we've been talking to the CPSC and felt that in an abundance of caution should do this recall.''

The recall is sure to be yet another black eye for the toy company, whose CEO recently acknowledged the amount of time executives have been diverted by the recall problems.

Mega Brands had hoped its problems were behind it after teaming with Intertek, one of the world's leading testing authorities, to redesign its Magnetix toys.

"We have a goal of creating toys that have zero defects,'' said Chizick. "It's a very ambitious goal but they are helping towards achieving it.''

Chizick said Mega Brands has no intention of selling its magnetic line of toys.

Mega Brands said it has received several offers, including one from the Rosen brothers, to purchase the remaining stationary division.