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SMCP ownership battle heats up amid illegal stake transfer claim -Breaking

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© Reuters. FILEPHOTO: View of Claudie Pierlot at the Hong Kong Shopping Mall, China on November 12, 2018. REUTERS/Bobby Yip

PARIS (Reuters) – A fierce ownership war broke out at SMCP on Wednesday. The major shareholders had claimed a 16% stake. This was after the French fashion brand’s illegal transfer to an offshore account. Therefore, a meeting was held to force a boardroom reshuffle next month.

According to a statement by Glas (a company representing SMCP shareholders), the transfer was reportedly made by SMCP’s former Chinese owner to transfer 1 euro to an entity located in British Virgin Islands by Chenran Qiu.

Glas includes Blackrock, an asset manager (NYSE:), and Carlyle’s affiliate. A worldwide freezing order was issued by a British commercial court to stop the transfer of additional SMCP shares.

Glas obtained a 29% stake in SMCP and 25% of its voting rights following the default of bonds issued by European TopSoho, a unit of the French group’s Chinese shareholder, the conglomerate Shandong Ruyi.

TopSoho has not responded to Reuters emails seeking clarification on Glas’s allegations.

Glas wants to sell its SMCP share and has asked for board changes, such as the removal Chenran Qiu’s father Yafu Qiu, president of the board.

SMCP announced that in response to a Paris-based commercial court’s ruling in favor Glas, it would host a shareholder meeting in January for the vote on five of its proposed board members being ousted. According to SMCP, all are connected to Shandong Ruyi.

Shandong Ruyi had ambitions to create a luxury fashion empire. In 2015, he embarked upon a purchasing spree. This included SMCP (purchased from private equity firm KKR 2016), and Aquascutum in London. Cerruti 1881 in Paris was also bought by KKR.

However, it is struggling to pay off its debts. The COVID-19 pandemic has made its financial woes worse.

SMCP has also seen a rebound, and third-quarter revenues are back at pre-pandemic levels.

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