Billionaire’s growing dispute over garden centre’s shares plan

May 10 2008 by Iain Laing, The Journal

GARDEN centre chain Dobbies has begun a legal clash with billionaire entrepreneur Sir Tom Hunter over its plans to raise £150m from shareholders.

Sir Tom, who owns 29.9% of the chain, is attempting to block an open offer announced by the Midlothian-based group in April to strengthen its balance sheet and fund expansion.

Supermarket giant Tesco owns 65% of the chain after a £155.6m takeover deal last year. It will cost Sir Tom’s West Coast Capital (WCC) investment vehicle around £40m to take up the extra shares and maintain its stake in the business.

If it does not, WCC’s holding could fall to around 15%. Sir Tom is seeking an interim order to block the proposals, although Dobbies said it would make a “robust defence” of its plans at a court hearing. WCC was unavailable for comment.

The garden centre chain has around £110m of debt, but is looking for the extra funding to expand the group beyond its current 23 sites, split between Scotland and south-east England.

Dobbies made its latest acquisition move with the £8m purchase of the Sandyholm garden centre at Crossford, in Lanarkshire, last month and further deals are in the pipeline. The group now has almost 2,000 staff.

A Tesco spokesman added: “We are surprised that WCC, which says it is committed to long-term growth at Dobbies, should seek to prevent it raising fresh funds.

“Tesco strongly believes that this open offer is by far the most advantageous means in current markets for Dobbies to raise vital capital for its future expansion.”