BREAKING NEWS: Masters Break-Up In Jeopardy, Key Partner Takes Action In Federal Court
A judge sitting in the federal court has ordered US hardware giant Lowe’s and Australian retailer Woolworths back into court next Wednesday after an “oppressive conduct” case was filed by the US hardware giant.
The move could be a major blow for Woolworths who were banking on a $1.5 billion sell-off of properties and stock from the failed hardware network.
Appearing in court this morning before Justice Lindsay Foster, Lowe’s sought an order winding up the Masters business, which is tied up in a corporate vehicle called Hydrox Holdings.
They are claiming shareholder oppression by Woolworths in the sale of the hardware and home improvement chain.
Lowe’s claims that Woolworths has wrongfully attempted to terminate the joint-venture, they want a liquidator appointed to oversee its windup.
The move could have an impact on both JB Hi-Fi and The Good Guys, who are both looking to take over Masters’ retail locations.
“Despite every effort to reach a fair resolution with its JV partner, Lowe’s has been left with no other option but to seek the guidance of the court to achieve an equitable and orderly wind-up of the Masters business,” Lowe’s said in a statement.
“Lowe’s has acted in good faith at every stage in both the development and operation of Masters, and has been at all times an engaged investor, a committed partner and proud employer.”
“On the other hand, Woolworths has engaged in oppressive conduct, including by invalidly and in bad faith attempting to terminate the JV.”
The move could also impact the sale of over $100 million in appliances, with a discount sale set to kick off this week.
As part of the process Woolworths entered into negotiations with Lowe’s to buy the US giant’s 33.3 per cent stake in Masters, which would allow Woolworths to have full control and dispose of the doomed retailer.
Those talks were slated to last only a few months, but they have seemingly broken down, stretching into six months of negotiations, and the two parties have failed to agree on a price for the deal. Woolworths and Lowe’s have engaged a string of valuers to come up with a price, but still the parties have refused to budge.
Last week Woolworths sought to push ahead with the wind-down process, shutting down Masters completely. It announced it would close all Masters stores by December 11 and sell off all its 61 properties and 21 development sites to a consortium of wealthy families and well-connected investors.
Those properties are set to be sold for $750 million to a consortium led by former UBS Australia boss David Di Pilla and including the billionaire owners of Spotlight, Chemist Warehouse and a range of private investors.
More to follow.