Lewis in battle to defend directors

Sparks are set to fly in the Western Cape High Court as the Lewis Group and David Woollam prepare for a possible showdown.

Johannesburg - Sparks are set to fly in the Western Cape High Court as the Lewis Group and David Woollam prepare for a possible showdown in a case that has the potential to damage the share price of the furniture store.

Lewis is defending its four directors that Woollam wants to be declared delinquent.

In a move to protect the company and save the share price from losing its value, Lewis has sought the intervention of the High Court.

The notice of motion filed in court consists of 87 pages, excluding the annexure.

Woollam made his request in terms of section 165 of the Companies Act, which enables a shareholder to request that a company commence proceedings to declare its own directors delinquent.

Lewis said Woollam’s request had to be set aside because it was “frivolous, vexatious and without merit”.

Delinquent

Woollam is seeking to have Lewis chief executive Johan Enslin; chief financial officer, Les Davies; independent non-executive chairman David Nurek; and independent non-executive director, Hilton Saven declared delinquent.

The company was not in a position to comment further as the notice of motion would be heard in the High Court on Wednesday. The company is seeking costs from Woollam on an attorney-client scale.

Business Report is in possession of this motion and the Lewis Group is listed as an applicant. There are five respondents.

Lewis Group is a leading credit retailer selling household furniture and electrical appliances through three brands: Lewis, Best Home and Electric, and Beares. It has more than 760 stores and listed on the JSE in 2004.

In the filed papers Woollam is listed as a director at Summit Financial Partners. Summit is described as conducting business in the consumer credit industry providing financial advice and assistance to aggrieved and distressed consumers.

Shares

When contacted for comment on Friday through Summit, the firm promised to come back with a response after consulting with the lawyers. However, there was no response by the end of the day.

The filed response shows that Woollam holds 10 shares out of 98 057 959 Lewis shares issued as a share capital. It is for this reason that the company accused Woollam of having ulterior motives.

“The company regards Woollam’s demand in terms of section 165 as the latest in a lengthy list of actions by him calculated to damage the company’s reputation, operations and business. As the company has fully articulated in its court papers, Woollam held a long-standing short position on Lewis’ shares at the time of his campaign against Lewis,” Lewis said in a statement published on the Stock Exchange News Service.

In the filed papers Woollam said that Lewis’s predatory culture would continue to destroy shareholder value and that Lewis’s business practices were having a negative impact on the poor.

“Lewis believes that Woollam’s ongoing campaign against the company is a concerted attempt by him to drive down the price of Lewis’s shares to opportunistically benefit financially by taking short positions in Lewis’s shares,” the firm said.

Ian Cruickshanks, an independent analyst, said he was not familiar with what was happening within the Lewis Group, but the case had the potential to harm the business.

“It is not good news for the company. An action like this normally puts weight on a share price… There are two things one must consider here when something like this happens. Firstly, it is too expensive for any company to defend a court case and, secondly, the time is wasted in courts as the board becomes too occupied with the case,” Cruickshanks said.

Lewis shares fell 1.92 percent on Friday to R49.50.

BUSINESS REPORT