TORONTO -- 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.
In a statement, HBC says 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 (TSX:HBC) says 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.
In a letter to shareholders Wednesday, Land & Buildings said the HBC board has "essentially agreed to sell a controlling interest in the company through the issuance of a convertible preferred security" without seeking approval of minority shareholders.
Land & Buildings released its letter as it urged HBC to consider a bid for its German operations by Signa Holding.
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.
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