Retailer caught up in turbulent waters
EMBATTLED Burleigh Heads-based online sports clothing retailer SurfStitch is looking at selling assets as costs mount from several legal proceedings and an investigation by the corporate regulator.
SurfStitch says it is exploring the option of selling media and other assets as it deals with an ongoing court case with Crown Financial group, two class actions and a continuing investigation by the Australian Securities and Investments Commission.
In a statement yesterday, the retailer said the matters continued to affect it and its
“cash position”. “While the situation did not prevent the company’s retail business remaining viable, “the position of the (SurfStitch) group is being closely monitored,” the company said.
SurfStitch owns surf and entertainment media websites
magicseaweed.com and stabmag.com. It sold garageentertainment.com.au to media group Madman Entertainment in April.
The Crown Financial litigation relates to a dispute over purported contracts between members of the SurfStitch group and entities in the Crown Financial group relating to content and branding agreements.
SurfStitch yesterday said it had sought, and continued to seek, the possibility of settlement of all legal proceedings, but had so far not been successful.
“The company is working steadily to stem losses within the business, improve the key underlying retail business operations and deal with the litigation challenges in an orderly fashion,” it said.
Crown Financial, which has a stake of more than 5 per cent in the retailer, has previously called for an extraordinary general meeting to vote on removing SurfStitch chairman Sam Weiss from the board.
The retailer yesterday urged shareholders to vote against the resolution, saying that the removal of Mr Weiss from the board was not in the best interests of the company.
SurfStitch went into a trading halt in late May following the launch of the potential $100 million class action by shareholders.
Shares in the group last traded at 6.88¢ a share – significantly lower than their peak of $1.90 in December 2015. SurfStitch is expected to resume trading when it reports its full-year results next month.