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HBC accuses Land & Buildings of misleading shareholders about Rhone investment

A Hudson's Bay Co. store sign is shown at its Toronto flagship store on July 29, 2013. Hudson's Bay Co. accused an activist investor of misleading shareholders regarding the sale of the retailer's Lord & Taylor Fifth Avenue building and a related investment by Rhone Capital. THE CANADIAN PRESS/Nathan Denette
November 02, 2017 - 1:10 PM

TORONTO - Hudson's Bay Co. and activist investor Land & Buildings continue to accuse one another of misleading shareholders regarding the sale of the retailer's Lord & Taylor Fifth Avenue building and a related investment by Rhone Capital.

In a statement, HBC (TSX:HBC) said it has not sold a controlling interest to Rhone which agreed last month to invest $632 million in the retailer in the form of mandatorily convertible preferred shares, initially convertible into common shares at $12.42 per share.

HBC said it expects Rhone will initially hold a 21.8 per cent voting and equity interest in the company on a partially diluted basis and that could grow to 30.0 per cent if the preferred shares are held to their eight-year maturity.

The department store chain's statement is a response to the activist investor's urging that the retailer consider a bid for its German operations by Signa Holding and critique of the security issuance, which it said sells a controlling interest in the company without having sought the approval of minority shareholders.

Land & Buildings called some of HBC's comments "highly perplexing" in a statement released today and re-iterated its demand that shareholders be allowed to vote on the share issue. Such a vote is necessary to determine whether the new investment is in common shareholders' interests.

"The Rhone transaction effectively transfers meaningful and practical control of the company into a class of preferred shares that over time functionally outstrip common shareholders of their equity," Land & Buildings said.

The announcement of the investment by Rhone last month was part of a series of deals that also saw HBC sell the Lord & Taylor building in New York to WeWork Property Advisors for C$1.075 billion.

News from © The Canadian Press, 2017
The Canadian Press

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