Deal: Mike Ashley wants to build his stake in Hugo Boss
Sportswear mogul Mike Ashley is pursuing a legal claim against investment bank Morgan Stanley.
The Sports Direct founder’s company Frasers accuses the bank of acting in ‘bad faith’ over transactions he made to build up his stake in the now reigning Hugo Boss fashion giant for £770 million.
His stake in the German brand is owned through Frasers – and held through a complex series of contracts that give Ashley total control of them.
Court documents allege that Morgan Stanley ‘intended to harm’ Frasers by indirectly forcing the company to transfer Hugo Boss stock options.
Reports said the ‘margin call’ imposed on the stock had cost Frasers money and Morgan Stanley’s actions were ‘reckless indifference’.
They say that attempting to force such a trade is based on the incorrect assumption that Frasers will act as an ‘activist’ to incite changes in Hugo Boss, despite assurances that it will not occur.
Ashley’s lawyers argued that imposing the margin call would cause ‘substantial commercial and reputational damage’ to Frasers, and lead to ‘unwarranted speculation about’ the financial situation. ‘ by Frasers.
His team is involved in the Hugo Boss takeover, but has steadfastly denied the rumors.
Its products are sold in his Flannels and House of Fraser stores.
Court papers revealed Ashley had offered £100m in cash and the full £1.9bn of Frasers’ stake in collateral to avoid the margin call, but the attractive property package was denied.
Frasers was forced to close or transfer some of its stock options in Hugo Boss.
The Danish bank Saxo, an intermediary through which Frasers built its stake in Hugo Boss, is also listed as defendants.
A spokesman for Morgan Stanley said: ‘We believe this claim is well-founded and without merit, and we will vigorously defend it.’
Frasers Group and Saxo Bank have both been contacted for comment.
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