Frank Stronach, former chairman of MI Developments IncFred Lum/The Globe and Mail
The multiple-vote share structure that enables Frank Stronach to control MI Developments Inc. will remain in place, Mr. Stronach says, meaning holders of the real estate company's common shares won't receive the same windfall as common shareholders of Magna International Inc.
Mr. Stronach, who is chairman of both companies, is giving up the multiple voting shares he has used to control Magna for decades, but will retain more than two-thirds of the votes at MI with less than 1 per cent of the equity.
"My plan is to really build the company to make it a very unique, profitable company," he said Friday after the real estate company's annual meeting.
While Mr. Stronach receives cash, class A shares and assets in a joint venture that gives the Magna deal a value of $863-million (U.S.) for him, common shareholders are expecting to see the end of the discount caused by the dual-share structure at the auto parts giant and a surge of as much as 30 per cent in the value of their class A shares.
At MI, he has faced acrimonious battles with minority shareholders for years, including shareholder lawsuits, an Ontario Securities Commission challenge of corporate governance practices and one minority shareholder comparing him to Cuban dictator Fidel Castro.
That same shareholder, a New York hedge fund, submitted proposals at one annual meeting urging him to take on more debt, turn the company into a real estate investment trust and sell off the company's controlling stake in Magna Entertainment Corp. (MEC).
Mr. Stronach used his multiple voting shares to defeat that proposal.
But he said Friday he will consider offers. "Maybe the shareholders will come up with a package and say: 'Would you accept certain things?'" he said.
There was just one question from shareholders at the annual meeting, which came after a year in which MEC plunged into Chapter 11 bankruptcy protection in the United States and several of its tracks were sold.
But to prevent what MI chief executive officer Dennis Mills called a fire sale of assets, the real estate company picked up five racetracks, most of which were the jewels in the MEC crown. That includes Gulfstream Park in Florida, where Mr. Stronach's vision of a track as a racing, gambling, retail and commercial hub is being tested with the opening earlier this year of The Village at Gulfstream Park.
Commercial, retail or residential developments are being planned on parcels at the other tracks MI now owns; two in Maryland and the fabled Santa Anita Park near Los Angeles and a track on San Francisco Bay.
But the rules in California in particular must be changed, said Mr. Stronach, who is a native of the same part of Austria as California Governor Arnold Schwarzenegger.
"We say to the state, 'Look, we have no problems with regulations to protect the public, to protect the integrity of the horse industry, but we must be allowed to open our store when we think we can get the most customers.' If this will not happen, then we just won't have racing. Then we develop the real estate."
He said if the rules that limit racing to two meets annually at each of the two California tracks are not changed within two to three years it will be the end of racing at the tracks.
MI announced a deal Friday with Penn National Gaming Inc. to create a joint venture to run the two Maryland tracks, one of which, Pimlico, is the home of the Preakness Stakes, the second jewel in horse racing's Triple Crown.