Surfstitch rejects key shareholder probe
The open letter from Crown Financial, which made a failed takeover bid for the retailer last year, says Crown is deeply concerned about Surfstitch’s recent trading halt.
“SRF is in a precarious position and disclosure to the market to date has been superficial at best,” Crown said in the letter, which was released to the ASX by Surfstitch.
Surfstitch said it has been fully compliant with its statutory and regulatory disclosure obligations.
Among a list of 18 questions, Crown asked Surfstitch whether it expects to be solvent by the end of the year, what its restructure plan is, and which assets is the company planning to sell.
Surfstitch refused to respond, saying many of Crown’s questions would require disclosure of detailed financial, strategic and management information.
“The company does not propose to respond to these questions and does not comment or affirm any of the various assertions in the Crown Financial letter,” Surfstitch said in a statement.
The retailer added that many of the questions are speculative or would require the company to comment on ongoing or incomplete negotiations.
“Many of the questions would require disclosure of financial, strategic and/or management information at a granular level,” Surfstitch stated. “This information has not previously been made available and will not be provided in this instance.”
Crown Financial, which has a more than five per cent stake in the retailer, has also called for an extraordinary general meeting to vote on removing Surfstitch’s newly installed chair Sam Weiss from the board.
It has also taken legation action against Surfstitch over content sharing deals.
The Australian Securities and Investments Commission is also investigating Surfstitch’s disclosures in connection with the content sharing deals.
Surfstitch went into a trading halt in late May after shareholders launched a potential $100 million class action.
The action launched by law firm Quinn Emanuel in Queensland’s Supreme Court accuses Surfstitch of making misleading statements and forecasts of its 2015/16 earnings.
The company last traded at 6.8 cents a share, significantly lower than its peak of $1.90 a share in December 2015, and is expected to resume trade when it reports its full-year results in August.
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