Sports Direct has launched legal action against House of Fraser ahead of its proposed company voluntary arrangement.
Mike Ashley’s discount retailing empire, which has owned an 11.1% stake in HoF since 2014, has filed a petition for an injunction, claiming that it has been “repeatedly denied information to which it is legally entitled”.
HoF announced last week it is to begin a company voluntary arrangement (CVA) process – including a store restructuring that is likely to result in closures – in June, as it was confirmed that the department store retailer’s owner, Nanjing Cenbest, is to sell a 51% stake in the business to C Banner, owner of Hamleys.
Liam Rowley, head of strategic investment at Sports Direct, said in a statement: “We have been frozen out by House of Fraser. Their dealings in China are opaque and it is blatant we have been unfairly prejudiced.”
The statement released by Sports Direct announcing the legal action also added that the business ”has been a long-term critic of the House of Fraser group’s strategy and management, which has left the group in severe financial difficulties.”
Commenting on the CVA and sale announcement, Frank Slevin, chairman of House of Fraser, told the newspaper: “C Banner’s acquisition of 51% of House of Fraser, together with the new capital and restructuring, represents a step to securing House of Fraser’s long-term future. With the support of Nanjing Cenbest and Sanpower, [HoF CEO] Alex Williamson and his team have made substantial progress on our transformation journey. However, we need to go further and faster if we are to confront the seismic shifts in the retail industry.
House of Fraser declined to comment.