Sports Direct to block £20m rescue plan for Blacks Leisure
Ashley seizes back Blacks' stake to enable vote at EGM
Tuesday 23 February 2010
Mike Ashley, the owner of Newcastle United and founder of the sportswear chain Sports Direct, is poised to scupper rival Blacks Leisure's £20m plan to revitalise its store portfolio, after he seized back the rights to a 29 per cent stake in the outdoor retail specialist.
If, as signalled yesterday, it votes against the resolution, Sports Direct's subsidiary will defeat a proposed £20.3m cash call that requires the support of shareholders representing 75 per cent of Blacks' shares. The move would raise questions over the outdoor chain's future.
SportsDirect.com Retail (SWI) had been in a dispute with the administrator to Kaupthing Singer & Friedlander, the UK arm of the collapsed Icelandic bank, over ownership of the 28.5 per cent shareholding in Blacks.
Last year, SWI lost control of the stake for accounting purposes to the accountancy firm Ernst & Young (E&Y). But yesterday afternoon E&Y said it had "sold" it to Sports Direct. The firm also said it had sold a separate 11.9 per cent stake in rival JD Sports Fashion to Sports Direct. The sports equipment chain took a £53m hit on profits in 2008/09 after the stakes in Blacks and JD were seized by E&Y.
The share sale is the latest in a long line of controversies involving Sports Direct and its retail rivals, including Blacks, JD Sports and JJB Sports.
Sports Direct is under investigation by the Serious Fraud Office and Office of Fair Trading over alleged price-fixing after JJB Sports turned whistleblower. Sports Direct has said it is co-operating fully with the authorities.
Mr Ashley has previously publicly criticised Blacks' management team and even tried to oust them in the summer of 2007 over their plans to offload the surfwear business Freespirit.
The aggressive move by Mr Ashley, Sports Direct' deputy executive chairman, will be seen as an attempt to destabilise rival Blacks at a difficult time for the outdoor chain.
The outdoorwear retailer flirted with collapse in November before it was saved by agreeing a company voluntary arrangement, an insolvency procedure, with landlords. The CVA, which enabled it to ditch 87 loss-making stores, followed it closing down most of its struggling boardwear division.
Earlier this month, Blacks said that it would use the proposed £20.3m fundraising to open up to 29 new Blacks and Millets stores by February next year and refurbish as many as 130 existing shops, as well as cancel its higher-interest seasonal peak bank facility of £7.5m.
In a statement yesterday morningbefore E&Y's release, Sports Direct said: "If such rights in the shares are acquired, SWI currently intends to vote against the resolution proposed by Blacks at its general meeting convened for 24 February." But it said the decision "remains subject to review and final determination by the board" ahead of the meeting tomorrow.
Blacks said it is "seeking further clarification of the intentions of Sports Direct and SW1".
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