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SURFSTITCH (ASX: SRF) has confirmed that it intends to defend legal action initiated by a major shareholder in the company, Crown Financial, and that it has lodged counter claims against it and other entities involved in its billion-dollar fall from grace.
The embattled online sports and surfwear re-tailer has confirmed its board received an "open letter" from Crown Financial which contends that SurfStitch is being operated in a manner which is contrary to the best interests of the company and its shareholders.
"SRF is in a precarious position and disclosure to the market has been superficial at best," says Crown's managing director Joakim Sundell in the letter.
Earlier this week, Crown Financial used its 9.33 per cent stake in SurfStitch to call for an extraordinary general meeting (EGM) for a vote on the removal of chairman Sam Weiss.
Crown Financial has taken legal action against SurfStitch, which has suffered a spectacular fall from grace in 2016 and 2017, over the fallout from a failed content sharing deal with its subsidiary Three Crowns Media Group which was one of the major causes of its share price wipeout.
The company downgraded its earnings three times, largely because of a dispute with surf technology group Coastalwatch and Crown Financial over the licencing deals which fell through, and this wiped around $20 million off revenues.
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