SURFSTITCH MAJOR SHAREHOLDER CALLS FOR REMOVAL OF CHAIRMAN SAM WEISS
Written on the 7 June 2017 by Ben Hall
EMBATTLED sports and surfwear re-tailer Surfstitch (ASX: SRF) has confirmed it has received a request from a major shareholder for the removal of chairman Sam Weiss and has called for an extraordinary general meeting (EGM) to vote on his future.
The request was made by Crown Financial which has a 9.33 per cent stake in Surfstitch, more than the 5 per cent it needs to be eligible to call for an EGM on the issue.
Crown Financial has taken legal action against Surfstitch, which has suffered a spectacular fall from grace in 2016 and 2017, over the fallout from a failed content sharing deal with its subsidiary Three Crowns Media Group which was one of the major causes of its share price wipeout.
The company wants Weiss removed as a director and says it will make no further announcements on the matter.
The Gold Coast-based Surfstitch, which sells brands such as Billabong, Quiksilver, Vans and Converse, went into a voluntary three-month trading halt late last month after it was hit by a $100 million shareholder class action.
Law firm Quinn Emanuel filed an action in the Queensland Supreme Court alleging SurfStitch failed to tell shareholders it was trading at a loss and it tried to cover that fact up.
On Monday 22 April, the Gold Coast company announced its losses will double to as much as $11.5 million this year, sending its shares down more than 25 per cent in a day.
The class action, backed by litigation funder Vannin Capital, is open to anyone who purchased or held Surfstitch shares between August 27, 2015, and June 8, 2016.
The market capitalisation of Surfstitch has fallen rapidly from its peak in November 2015 of $590 million to its recent value of $18.9 million.
Since its much-hyped IPO in 2014, SurfStitch has endured a series of major setbacks with a massive loss in FY16, a share price wipeout and the acrimonious departure of co-founder and CEO Justin Cameron.
The company downgraded its earnings three times, largely because of a dispute with surf technology group Coastalwatch and Crown Financial over licencing deals which fell through, and this wiped around $20 million off revenues.
Investors who piled into the IPO at $1.00 a share have suffered a 93 per cent loss.
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Author: Ben Hall