// Mike Ashley is pursuing a legal claim against Morgan Stanley with court documents claiming the bank ‘intended to harm’ the group as he looked to build up his stake in Hugo Boss
// Frasers Group now owns a £770m stake in Hugo Boss, which it upped in June
Mike Ashley is pursuing a legal claim against investment bank Morgan Stanley, which he claims acted in ‘bad faith’ over trades he made to build his stake in Hugo Boss which is now worth £770million.
The billionaire’s shares in the German luxury retailer are owned through Frasers – and held through a complex series of contracts which put Ashley in overall control of them.
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Frasers upped its stake in Hugo Boss back in June and now holds 3.4 million shares of common stock, which represent 4.9% of Hugo Boss’s share capital, and 18.3 million shares of common stock via the sale of put options, representing a further 26% stake.
This is Money reported that court documents claim Morgan Stanley ‘intended to harm’ Frasers by indirectly forcing the firm to transfer Hugo Boss stock options.
The imposed ‘margin call’ on the shares cost Frasers money and Morgan Stanley action was ‘recklessly indifferent’, according to the papers.
They say attempting to force such a trade was based on the incorrect assumption that Frasers would behave as an ‘activist’ to agitate for changes at Hugo Boss, despite assurances it would not.
Imposing the margin call would have caused ‘significant commercial and reputational damage’ for Frasers, and led to ‘unwarranted speculation as to Frasers’ financial position’, Ashley’s lawyers argue.
Frasers has been linked with a potential takeover of Hugo Boss, but has firmly denied the rumours.
Howeverm Hugo Boss products are sold in the group’s luxury department stores Flannels and House of Fraser.
Court papers reveal Ashley offered £100million in cash and his entire £1.9 billion Frasers’ stake in collateral to avoid the margin call, but the staggering package was refused.
As a result, Frasers was forced to close out or transfer some of his share options in Hugo Boss
A Morgan Stanley spokesman told This is Money: ‘We believe this claim is contrived and without merit, and we will defend it vigorously.’
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