Retail billionaire Solomon Lew claims he will be oppressed as a minority shareholder if Country Road’s takeover of Witchery goes ahead.
Mr Lew’s Australian Retail Investments (ARI), which owns almost 12 per cent of Country Road, has made a series of attacks on the fashion retailer’s management in a six-page letter sent to company secretary David Thomas.
ARI said it was concerned that the rights issue was ‘‘part of a general strategy by [Woolworths] and Country Road to enable [Woolworths] to compulsorily acquire the minority shareholdings in Country Road’’.
ARI has backed away from an earlier threat to go to court to stop the deal going ahead, but said it now plans to take legal action seeking ‘‘further information and documents from Country Road’’.
Mr Lew’s claims, made in a letter sent by ARI’s lawyers last Tuesday, were comprehensively denied by Country Road in a three-page response sent by its lawyers on Thursday.
Country Road has asked Mr Lew to pay $11 million as part of a $92 million rights issue that will be used to help fund the Witchery takeover.
Witchery will cost Country Road $172 million, made up of $81 million committed to the rights issue by its majority shareholder, South African group Woolworths Holdings, and a $81 million loan guaranteed by Woolworths.
If Mr Lew does not participate in the rights issue, he risks a dilution in his shareholding to the point where Woolworths could compulsorily acquire his stake.