Search site Search ticker symbol

Are you looking for a stock?

Try one of these

Stronach to give up control of real estate firm: sources

A
A
 

Billionaire Frank Stronach is set to give up control of his real estate company, MI Developments (MIM-N) in a new deal with shareholders, according to two sources familiar with the matter.

Stronach, who holds a controlling voting stake in the company, is prepared to exchange his control of the $800 million real estate development company for some of its horse racing track assets, these sources said.

The deal which will swap his special voting shares in the company for the racing assets, is expected to get the support of some of the firm's big shareholders like hedge funds Farallon Capital and David Einhorn's Greenlight Capital.

As a result of the deal, Stronach will no longer control the board, and a new board will be elected by the new shareholders, said these sources, who asked not to be named because they were not authorized to speak with the media about the talks.

Stronach, who is founder of auto parts company Magna International Inc., may still retain a smaller stake in the company after the deal, which could be announced as soon as this week and is expected to close by April 2011, one of the people said.

Stronach now controls a large number of Class A subordinate voting shares and Class B shares in the company, which together amount to about 60 percent of the total voting power of MI Developments' outstanding shares.

MI Developments' horseracing and gaming assets include Santa Anita Park, Golden Gate Field, Portland Meadows, Gulfstream Park, Maryland Jockey Club and various horseracing technology assets -- all formerly owned by now-bankrupt Magna Entertainment.

The deal would be somewhat of a victory for Einhorn, who has been a big holder of the company's shares since it was spun off from Magna International in 2003. Over the past few years, the hedge fund manager has publicly complained that the board of the company was not acting in the best interest of its shareholders and even sued the company over his complaints.

A spokesperson for Farallon declined to comment, and Greenlight Capital declined to comment on the deal. A MI Developments representative was not immediately available to comment.

DISLIKE
 
COMMENTS
 
CTV.ca CTV Two CTV News CTV News Channel BNN - Business News Network CP24