Cape Town - Lewis Group [JSE:LEW] said on Friday it has launched proceedings to set aside a demand received from a shareholder to declare some of the company’s directors delinquent.
The shareholder, David Woollam, a director of Summit Financial Partners and a holder of a number of ordinary shares in Lewis, has made this demand in terms of Section 165 of the Companies Act. On June 1 Lewis received the letter of demand to declare four directors, including the CEO, delinquent.
The directors named are CEO Johan Enslin, chief financial officer Les Davies, chairperson David Nurek and non-executive director Hilton Saven.
Lewis launched the court proceedings to set aside Woollam's demand in the Western Cape Division of the High Court in Cape Town.
Lewis alleges that Woollam’s demand is "frivolous, vexatious and without merit". The group is seeking costs from Woollam on an attorney-client scale.
"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," Lewis said in a statement.
"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 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.
Lewis has filed a complaint in respect of Woollam’s short position with the Financial Services Board (FSB).
Woollam's demand relates - among others - to Lewis charging customers a cost of loss of employment insurance, which the company claimed was mistakenly sold to them.
In October last year Lewis agreed to refund a total of R67.1m to customers for the cost of loss of employment insurance - R44.1m plus R23m in interest.
On March 30 2016 the FSB confirmed that it is engaged in an ongoing investigation in respect of suspected insider trading and prohibited practices in relation to shares in Lewis Group.
Woollam denies short position
In response to Lewis' action, Woollam on Friday denied that he or any of his associates have a short position in Lewis.
"My only exposure to Lewis is a small long position in its ordinary shares. They chose rather to focus on a vicious attack on my person, and to continue the smear campaign against me that has to date been their primary response to any attempts to get the company to respond to my concerns," said Woollam.
He emphasised that the focus of his campaign has not been to destroy shareholder value, but that he is motivated by the need for reform in a consumer finance industry "that has seemingly lost its moral compass and has sacrificed the financial wellbeing of ordinary working class people in the pursuit of greed".
"This is at best a short term strategy which is incapable of success in the long term. I continue to urge the Lewis board and shareholders to take these allegations seriously and make the necessary changes in leadership, governance and compliance, in order to pave the way for a restoral of faith by all stakeholders in the company," said Woollam.
Also in March this year, Lewis completed the acquisition of a portfolio of 57 Ellerines and Beares stores in Namibia (21 stores), Botswana (20), Lesotho (10) and Swaziland (6).
This expanded its store presence outside SA to 120 and follows approvals for the R250m acquisition announced in November 2015.
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