Masters partners Woolworths and Lowe’s return to court

Former hardware partners turned adversaries US retail giant Lowe’s and Woolworths will face off in court today.

Lowe’s has taken its own action to wind up Masters. Picture: Brendan Radke

Former hardware partners turned adversaries US retail giant Lowe’s and Woolworths will face off in court this morning as they bicker over the corpse of their failed hardware chain, Masters, and an ­attempt to wind it up.

It is expected counsel for Lowe’s will provide detail before judge Lindsay Foster in the Federal Court relating to accusations about Woolworths trying to ram through the winding up of Masters contrary to the advice of internal lawyers and against the interests of minority shareholder Lowe’s.

A glimpse of Lowe’s case over the planned $1.5 billion Masters fire sale was presented in the court on Monday by lawyers ­acting for Lowe’s, who argued Woolworths “dumped” thousands of pages of documents on Lowe’s less than 24 hours before a key board meeting.

Later at a board meeting on August 24 of Hydrox Holdings — the entity that houses Masters — Woolworths forced through a purported termination of the hardware joint venture, despite the resistance of Lowe’s nominees on the board, lawyers for Lowe’s told the court.

“So what is, we say, now going on is that there is a de facto winding up of the Masters business that has been conducted by Woolworths from which my ­clients have been wrongfully excluded in having any meaningful input by way of understanding what’s going on, contributing to it and having input into the ­decisions that are being made,’’ they told Justice Foster.

Simmering tensions between Lowe’s and Woolworths, building since February, exploded this week when Lowe’s raced to court and applied for a hearing to seek the liquidation of the failed Masters business and an equitable division of assets, which included about $750m of property.

Reflecting the hostility between the parties, Woolworths was unaware of the court action on Monday and remained unaware even as its one-time partner, Lowe’s, appeared before Justice Foster.

Woolworths and Lowe’s had been in talks since February to strike a price for Woolworths to buy back Lowe’s one-third stake in Masters, but the parties failed to agree, and last week Woolworths pushed ahead with its own plan to close Masters and sell off its assets. This fire sale included selling 82 Masters properties to a consortium of investors for $750m, disposing of $500m of inventory and selling its Home Timber & Hardware arm to Metcash for $165m.

Lowe’s has argued it has been “oppressed” by Woolworths and has taken its own action to wind up Masters, potentially scuppering Woolworths’ $1.5bn fire sale.

Woolworths is expected to reject suggestions it kept information from Lowe’s or acted improperly towards its joint venture partner. On Monday, lawyers for Lowe’s said the resolution pushed by Woolworths nominees last week on the Hydrox board went against internal advice from counsel.