01/04/2012 3:26PM

Stronach forms six racing companies for public offering


Eclipse Award-winning owner and breeder Frank Stronach has created six racing-stable companies that will sell shares to the public for $10 a share, according to documents filed in December with the Securities and Exchange Commission.

The development follows a spending spree by Stronach at the 2011 yearling sales, and it appears that at least some of those purchases could point for the new racing stables. Stronach is seeking initial public offerings for all six corporations, each of which will offer 405,000 shares and own 20 horses that were purchased as yearlings in 2011 and turned 2 on Jan. 1.

The corporations are named after six of Stronach’s most successful horses: In addition to Awesome Again Racing Corporation there are companies named for Red Bullet, Ghostzapper, Perfect Sting, Ginger Punch, and Macho Uno.

A single privately held company, Golden Pegasus, has subscribed for 44,000 shares in each corporation and will manage all of the racing companies. The SEC filings list Stronach as Golden Pegasus’s chairman, and Stronach executives Michael Rogers and Mark Roberts as chief executive and president, respectively.

Jack Brothers, a longtime Stronach associate and co-operator of Hidden Brook Sales with Roberts and former Stronach farm manager Dan Hall, will serve as chief executive of each of the racing corporations and on the Golden Pegasus board. The rest of the Golden Pegasus board includes Alon Ossip, an executive vice-president at The Stronach Group; Howard Walton, president of the real estate firm The Howard Properties and a Thoroughbred and Quarter Horse owner; Lorne Weiss, a financial advisor with ScotiaMcLeod and a Thoroughbred owner and breeder; and Ron Charles, a former Santa Anita executive who is also publisher and residential property developer, longtime Thoroughbred owner, and consultant to the Global Betting Exchange gaming technology company.

Stronach, Roberts, and Hall will act as the companies’ horse selection team, along with veterinarians Dr. Robert McMartin and Dr. Peter A. Kazakevicius.

Each 90-day IPO could raise $4,050,000 for each company. A portion of the offering’s net proceeds – $1,235,966 – will repay Alpen House Racing, a wholly owned subsidiary of The Stronach Group that also operates Stronach’s Adena Springs Farms, for the horses’ purchase prices. The companies’ prospectuses also anticipate spending about $1.5 million for total operating expenses, including about $1.15 million for administrative and IPO-related expenses and $1.1 million for training and maintenance expenses, payable to Golden Pegasus.

Golden Pegasus “will provide training and maintenance services and will supervise all aspects of the training and racing development of the company’s horses,” according to the filings, for a $150 per-day fee for active horses in training and a $50 fee per day for retired horses “whether of not they are being retrained for purposes other than racing.”

Golden Pegasus will subcontract the day-to-day care, training, and racing management to Adena Springs.

Golden Pegasus will have an office at Gulfstream Park, a Stronach-owned property, and the racing corporations will have “a preference for racing at Gulfstream Park and Santa Anita Park,” both Stronach-owned racetracks, according to the filings. “We may similarly favor other racetracks owned by The Stronach Group,” the prospectuses read.

The Stronach Group’s other racetracks include Pimlico Race Course and Laurel Park in Maryland, Golden Gate Fields in California, and Portland Meadows in Oregon.

The corporations will disperse their horses, except those who have been lost through the claims box or through death, in November 2013.

Stronach executives associated with the new venture did not immediately return calls seeking comment.