Sports Direct launches legal action against embattled House of Fraser
Mike Ashley’s sports retailer owns an 11.1% stake in the department store chain.
Mike Ashley’s Sports Direct has launched legal action against House of Fraser, casting further doubt on the embattled department store chain’s future.
The sports retailer owns an 11.1% stake in House of Fraser, and Mr Ashley is claiming that his firm has been “repeatedly denied information to which it is legally entitled”.
According to a petition lodged with the High Court in London on Friday 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 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 House of Fraser shutting a portion of its 59 stores, which will be carried out through a Company Voluntary Arrangement (CVA).
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 legal papers name the owners and directors of the House of Fraser, including chairman Frank Slevin.
House of Fraser’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 House of Fraser on its restructuring proposal, with the terms of the plan likely to be finalised at the beginning of June.
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.