Billionaire retailer Solomon Lew has threatened to take legal action against Myer’s board if the company decides to pursue a fundraiser, in a significant escalation of tensions between the two parties.
Lawyers acting for Mr Lew’s Premier Investments on Wednesday wrote to Myer’s board about reports in age and The Sydney Morning Herald that the retailer was looking for a new high-profile investor to take a stake in the business via a 10% equity placement.
The potential fundraising was touted as a way for Myer to defend against the recent attack from Mr Lew and Premier, as it would dilute his recently acquired 16.7% stake.
In a letter to Myer’s advisers at Clayton Utz, Arnold Bloch Leibler’s partner Jeremy Leibler said Premier was “amazed” that Myer and his board were looking for ways to dilute Premier’s stake given the recent poor business performance.
“The Prime Minister can only interpret Myer’s steps to seek fundraising as a bad faith attempt by Myer to stifle the Prime Minister’s plea for changes to Myer’s board and ‘interfere with the Prime Minister’s proposal to reconstitute the Myer board with a new independent chairman and a majority of independent directors,’ Mr Leibler said.
“Premier will take all measures in its power to prevent any attempt to dilute and neutralize Premier through a capital increase.” This includes appealing to the take-over bid committee or seeking court orders to prevent such a capital increase, Premier warned.
Myer has again been beleaguered by Mr Lew since early July, when the rag trader acquired an additional 5% stake in the business and began campaigning for a seat on Myer’s board, threatening to summon an extraordinary general meeting to empty the company’s current directors and appoint two of its own, alongside a majority of independent directors.
Since then, tensions between the two have continued to escalate, with Myer appointing lawyers and corporate advisers Luminis Partners and apparently exploring other options for the company, including the potential sale of the online division to Myer’s rapid growth or the raising of new capital.