Published On: Thu, Oct 11th, 2018

Stronach lawsuit offers glimpse into Adena Farms, the Stronach Group’s humanely raised livestock venture

Since amassing a fortune in an auto parts empire started in a Toronto garage Frank Stronach has pursued a new dream — a grass-fed, open-pasture livestock business in Florida that aims to become a leader in the market for humanely raised cattle.

According to allegations in a $ 520-million lawsuit filed by Stronach and his wife against parties including his daughter, Stronach Group president and chairperson Belinda Stronach, however, the business is in a precarious state and may never reach its potential. That’s a result of “interference” by Belinda and co-accused Stronach Group CEO and family adviser Alon Ossip, the suit claims.

“Regrettably, Belinda and Alon became unfairly and improvidently dismissive of Frank’s vision for Adena Farms and Adena Golf,” says the statement of claim, referring to the agricultural business on 95,000 acres that sells to retail outlets and restaurants and the nearby 420-acre golf and country club.

The 73-page suit, which contains allegations related to the management of the family’s assets and trust funds, says Belinda took steps last summer to abruptly close the golf club over Frank’s objections and put the business up for sale at a steep discount.

Read more:

Frank Stronach sues his daughter Belinda alleging mismanagement of assets and trust funds

The lawsuit, filed in Ontario Superior Court, says the moves “widen the growing rift between Belinda and other members of the Stronach family including the plaintiffs.”

The suit seeks the removal of Belinda Stronach and Ossip from all corporate officer and trustee positions related to the Stronach businesses. None of the claims have been proven in court and the accused have denied the allegations.

The Stronachs said in a statement released through their lawyer Wednesday that they “regret having to commence proceedings … against their daughter Belinda, Alon Ossip and others (and) only did so as a last resort, after having made considerable efforts over a period of almost two years to resolve the matters at issue on a consensual basis.”

Belinda Stronach also released a statement Wednesday. “Family relationships within a business can be challenging,” she said through spokesperson Greg MacEachern.

“My children and I love my father. However, his allegations are untrue and we will be responding formally to the statement of claim in the normal course of the court process.”

Ossip spokesperson Paul Deegan said in a statement Wednesday that the allegations against Ossip are “baseless and are not grounded in fact or reality.”

“Alon has always honoured his obligations and acted in good faith to preserve and grow the Stronach family’s assets and to protect the interests of all members of the family,” Deegan said.

“Alon created huge wealth for the family, and he has always operated in a prudent and commercially-sensible manner. Frank Stronach was a great auto parts entrepreneur, but his recent excessive spending and numerous failed ventures put his family’s wealth at risk.”

The Stronach Group operates a network of race tracks, simulcasting venues and off-track betting facilities. It also owns thoroughbred training facilities in conjunction with its racetracks and operates facilities that manufacture a straw-based bedding product called StreuFex.

As well, it operates horse breeding stables and facilities that shelter race horses after their careers have ended and seek adoptive homes. The lawsuit describes the group as encompassing 253 Stronach family-owned corporations, trusts, and other entities established in various jurisdictions around the world.

The lawsuit says the farm business is well positioned to meet increasing consumer demand for environmentally friendly beef, noting that other suppliers including Maple Leaf Foods and Whole Foods Markets have recently shifted to all-natural meat products.

Eighty-six-year old Frank Stronach told Canadian Business magazine in 2016 that he is close to being a vegetarian. The global grass-fed beef market is expected to post a compounded annual growth rate of more than five per cent through 2022, according to a report by research firm Technavio.

Harvard Animal Law researchers in a separate report cite growing consumer interest in beef from cattle raised in pasture rather than grain feedlot systems due to the perception that the former is more sustainable — although it notes that the industry faces challenges due to an inefficient supply chain.

The suit says the effort by Belinda Stronach and Ossip to dismantle the agri business has been to the detriment of the Stronach Group, an Aurora-based real estate, entertainment, thoroughbred horse racing and parimutuel wagering company chaired by 52-year-old Belinda.

Frank Stronach, who worked for a few years as a machinist in his native Austria, arrived in Canada in the early 1950s with a few hundred dollars in his pocket. He built Aurora, Ont.-based Magna into a company with revenue of $ 28.7 billion (U.S.) and net income of $ 1.1 billion (U.S.) by 2011 — the year he stepped down as chairman. Magna, Canada’s biggest car-parts maker, had sales of about $ 40 billion (U.S.) in 2017.

Stronach ranked 31st on Canadian Business magazine’s list of the richest Canadians last year, with an estimated net worth of about $ 3.1 billion.

With files from Bloomberg

Michael Lewis is a Toronto-based reporter covering business. Follow him on Twitter: @MLewisStar

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Stronach lawsuit offers glimpse into Adena Farms, the Stronach Group’s humanely raised livestock venture