Woolies hid ‘get out’ game plan, says Masters partner Lowe’s

Lowe's says it was kept in the dark in the dying days of Woolworths’ plan to sell Masters’ assets.

Woolworths wants the fight with Lowe’s to be taken into an arbitration to be overseen by former High Court chief justice Murray Gleeson. Picture: Stuart McEvoy

In the bitter dispute between retail heavyweight Woolworths and US hardware giant Lowe’s over their exit from hardware chain Masters allegations the Australian group had last month prepared a “game plan” to terminate the venture were aired in court yesterday.

In the Federal Court, Woolworths pushed for the dispute to be handled in a closed arbitration and the US chain alleged it was kept in the dark in the dying days of the Woolworths’ plan to sell Masters’ assets as part of a $1.5 billion fire sale.

Lowe’s, which had earlier blasted Woolworths for “oppressive conduct’’ and acting in “bad faith’’ over the planned shutdown of Masters, zeroed in on events in the lead-up to a meeting of Masters directors ahead of Woolworths’ full-year results last month.

Lowe’s revealed in court that a document, known as “The Game Plan”, had been developed by the Australian retailer with the aid of high-profile insolvency adviser Mark Korda of KordaMentha, and Woolworths’ investment banking advisers at Citi.

Noel Hutley SC, counsel for Lowe’s, told the court the plan was set out in a “very convenient and colourful way”.

The planned wind-down was to be kicked off on August 12 and Lowe’s was to be put on notice about the venture ending as Woolworths raced to complete the Masters sale by the time it unveiled its results.

The court heard that Lowe’s had tried to find out what Woolworths was planning and the US group’s representatives on the board of Hydrox Holdings (the entity that owns Masters) were insufficiently informed.

Earlier that month, Lowe’s had sought information as to whether it was in the best interest of the Hydrox Holdings venture “for the Masters business to be placed in voluntary liquidation”.

However, it claimed that Woolworths’ refused to provide “any relevant information”.

The plan to close Masters also laid out scenarios, including ­Hydrox chairman, Woolworths’ chief legal counsel Richard Dammery, Mr Korda and Woolworths’ law firm King & Wood Mallesons, in which the Australian group would seek to get Lowe’s to ­approve the end of the venture but if they did not then Woolworths would terminate it.

Lowe’s claimed that it was given 1200 pages of documents on August 23 and, at a crucial meeting a day later, board represen­tatives from Woolworths changed completely and Mr Korda and two other directors were to be ­appointed.

Mr Dammery chaired the meeting and there was a discussion about the possibility of winning approvals that would have ended the venture but Lowe’s said that it was “totally unaware” of this proposal.

Woolworths wants the fight with Lowe’s to be taken into an ­arbitration to be overseen by ­former High Court chief justice Murray Gleeson. Woolworths’ counsel, Bret Walker SC, told the court this was the appropriate mechanism to resolve the dispute. The battle between Lowe’s and Wool­worths is back in court today before judge Lindsay Foster.

Lowe’s last month initiated surprise legal action after months of talks to sell its one-third stake in Masters back to majority owner Woolworths. It brought the matter to a head last month by seeking an order to appoint an independent liquidator to oversee the winding up of Masters.

David Di Pilla, the former investment banker and ­architect behind a consortium of private investors to seize 82 Masters sites for $750 million, is standing by his deal with Woolworths

His backers, which include the billionaire families behind retailer Spotlight, Chemist Warehouse and members of Sydney’s wealthy Salteri family, have signed deals to buy up to 61 Masters stores and another 21 development sites.