Ashley threat to future of High St giant
HIGH COURT PAPERS ARE SERVED ON HOUSE OF FRASER
Business writer TOON tycoon Mike Ashley’s Sports Direct has launched legal action against House of Fraser, casting further doubt on its future.
The sports retailer owns an 11.1% stake in House of Fraser, and the Newcastle United owner is claiming his firm has been “repeatedly denied information to which it is legally entitled”.
According to a petition lodged with the High Court in London by Sports Direct subsidiary West Coast Capital, the billionaire is seeking an injunction requiring House of Fraser to provide a copy of its corporate plan.
It comes after a tumultuous few weeks for House of Fraser, which employs hundreds at its Gateshead MetroCentre store and which last week confirmed that C.banner, the Chinese owner of Hamleys, is to take majority ownership of the group and will oversee a sweeping store closure programme.
The stake sale is conditional on it shutting a portion of its 59 stores, which will be carried out through a Company Voluntary Arrangement.
But the move has infuriated Sports Direct: Liam Rowley, head of strategic investments at the retailer, said: “We have been frozen out by House of Fraser. Their dealings in China are opaque, and it is blatant that we have been unfairly prejudiced.
“We have no option other than litigation to protect the interests of Sports Direct and its shareholders.”
The papers name the owners and directors of House of Fraser, including chairman Frank Slevin.
The chain’s troubles came to the fore in January after it suffered a drop in sales over Christmas and started talking to landlords about reducing the size of its property portfolio. KPMG has been drafted in to advise on restructuring.
House of Fraser is a subsidiary of Sanpower, a Chinese conglomerate chaired by Yuan Yafei.
Sports Direct described itself as a “long-term critic” of the House of Fraser group’s strategy and management, which it said has ultimately led to the CVA.
Last week House of Fraser announced its takeover by C.banner, but said that it would have to close “under-performing legacy stores” if it was to survive.
The company has stores at the Metrocentre, Darlington and Middlesbrough but has not said which of its shops are likely to be closed.
Sports Direct’s action against House of Fraser comes just a day after it launched a formal complaint against former North East MP Iain Wright over the way he handled the Business Select Committee investigation into the firm’s working practice.
The company said the probe wiped millions off the retailer’s share price and triggered assaults on shop staff, but Mr Wright said the complaint was baffling.