Sports Direct, the sportswear retailer, is expected to lose its largest stakeholding today, as the administrator to collapsed Icelandic bank Kaupthing takes control of its shares in Blacks Leisure.
Sports Direct had a 29% stakeholding in outdoor specialist Blacks Leisure and 11% in JD Sports Fashion. However, last night JD Sports Fashion said that Sports Direct’s stake had been taken over by the administrator to Kaupthing Singer & Friedlander following a legal dispute.
Kaupthing part-financed some of Sports Direct’s strategic stakes in its rivals and held some guarantees over them. Kaupthing’s collapse last year ignited a legal struggle over the ownership of the shares.
Blacks is expected to release a statement to the Stock Exchange this morning confirming the change of share ownership, according to The Times. However Sports Direct had already written off the shares, saying that it had lost control of them for “accounting purposes”.
Ernst & Young, the liquidator to Kaupthing, has applied to a judge for a ruling that Sports Direct does not own the shares, allowing Blacks and JD to notify the stock market that the shares had changed hands.
Blacks, which has put its Sandcity boardwear division into administration, has days to secure the continued backing of its banks and wants to shed unprofitable stores via a company voluntary arrangement.
Sports Direct, which is 71% owned by Mike Ashley, made an approach to buy Blacks in March. Simon Bentley, chairman of Sports Direct is understood to be planning to return to Blacks where he was previously chief executive. However, the loss of Sports Direct’s 29% stake in Blacks will make his return more difficult.
A source close to Sports Direct told The Times that the company believed the dispute had not been settled and that the retailer bought back the shares from the administrator. Sports Direct declined to comment