The Rouse Co. settled a dispute with a Canadian stockholder yesterday by agreeing to let the Canadian firm buy a 25 percent stake in Rouse and become the biggest shareholder of the Columbia-based real estate development firm.
Under the agreement Rouse will sell $36 million worth of new stock to Trizec Corp. Ltd. of Calgary, Alberta, a firm controlled by the Bronfman family, heirs to the Seagram liquor fortune.
Trizec will get a seat on the Rouse board of directors as part of the deal and Rouse will get a spot on Trizec's board.
Trizec already holds options to buy a block of 940,000 Rouse shares -- about 7 percent of the company's stock -- from an estate. Earlier this year the company announced plans to increase its stake to 20 percent by buying more stock on the open market.
Yesterday's compromise, however, provides for Rouse to sell 1.2 million shares of new stock directly to Trizac for $30 a share, a total of $36 million.
The agreement means that money that Trizac might otherwise have paid to other stockholders will instead go to Rouse, giving the company $36 million in additional cash.
The newly issued shares will increase Trizac's holding to 20 percent of Rouse. The agreement also permits Trizac to boost its investment to 25 percent by buying stock in the open market and to buy still more stock if necessary to protect Rouse from an unfriendly takeover.
Trizac already owns about 40 percent of another U.S. shopping center developer, Ernest W. Hahn Inc. of California.
Under accounting rules, if Trizac buys at least 20 percent of Rouse, the Canadian firm can report a proportionate share of Rouse's profits as its own. Investors who own less than a one-fifth stake in a company can report as income only the dividends paid on the shares.