It’s difficult to imagine a billionaire feeling oppressed, but retail mogul Solomon Lew is certainly trying.
Lew’s private investment company Australian Retail Investments has spent the last week corresponding with Country Road, of which it owns 12%. Country Road wants to buy Witchery for $172 million.
But Lew isn’t having any of it. In fact, he claims he’s being “oppressed” and the company may even be thinking of forcing him out.
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Country Road released the correspondence today – and it’s a fascinating look at how highly Lew values his stake in the company.
“Our client is concerned that the rights issue has been implemented by the majority directors of Country Road appointed to the board by Woolworths as part of a general strategy. . . to enable Woolworths to compulsorily acquire the minority shareholdings in Country Road,” the letter sent by Lew’s legal team states.
Woolworths Holdings has held a majority stake in Witchery since the late 1990s. Lew has refused to sell his own shares since then, keeping Woolworths at bay from owning 100%.
The correspondence sent to Country Road also argues that insufficient information has been released about the $92 million rights issue to fund the purchase. If he does take part, his stake could be watered down and subject to takeover.
It also argues these concerns are emphasised by the fact Country Road has already said it likely won’t declare a dividend for the 2012 financial year, “and vague references to additional covenants and restrictions”.
“In other words, if ARI participates in the rights issue it may receive no dividend in the future and if it does not then it may be that its shares in Country Road are compulsorily acquired.”
Country Road said yesterday it rejects ARI’s contentions, saying they were “baseless”.
“Contrary to what has been asserted by ARI, Country Road does not consider that there is a real risk of the Witchery acquisition not completing where the Rights Issue has completed.”
And while ARI has threatened court action if more information isn’t released soon, Country Road said today it intends to “proceed with dispatch of the Rights Issue booklet tomorrow”.