07/30/2012 3:31PM

Stronach shelves ownership plan


Frank Stronach has shelved a plan to offer shares in six publicly traded companies that would own and race Thoroughbreds, according to a report in The Wall Street Journal, though the companies may live on in another guise.

The plan to offer publicly traded shares has been scrapped due to poor “market conditions” and a host of SEC regulations governing publicly traded companies that would have made the stock offerings difficult to complete, according to officials quoted in the report.

“We got feedback, and we understand how the market conditions are,” said Michael Pilmer, an executive vice president of Stronach’s privately owned racetrack company, the Stronach Group, quoted in The Wall Street Journal.

Pilmer did not return a phone call Monday. But Jack Brothers, a bloodstock associate of Stronach who was to be CEO of the six companies, said Monday that the basic plan to launch racing partnerships through a Stronach-directed company was “alive and well.”

“There are so many different ways of financing it, so we’re exploring all those options,” Brothers said. He declined to offer specifics on how shares in the partnerships would be sold.

The companies filed registration papers with the SEC last December in advance of a planned spring offering of as many as 405,000 shares in each of the six companies. The companies would have priced each share at $10 and raced 20 Thoroughbreds through the late fall of their 4-year-old year, at which point the “assets” of each of the companies would be liquidated, with the proceeds distributed to shareholders if the amount of money raised exceeded the corporation’s liabilities.

In addition to the logistical hurdles presented by the offering – which would not have employed an underwriter to market and sell the shares – the plan faced several obstacles, with the most significant being the difficulties of having the companies overseen by the SEC, which has strict guidelines governing the purchase and sale of securities. The registration papers said that the cost of compliance with SEC regulations would run to $1.15 million for each company, or more than one-quarter of the amount expected to be raised in each offering.

Officials who run racing partnerships said earlier this year that the plan, on paper, would provide an attractive opportunity for everyday racing fans to buy in to a racing partnership. However, many officials doubted that the plan to offer the shares would be launched, citing the legal and logistical difficulties in offering shares in racehorses through companies regulated by the SEC.