Lowe’s Companies has filed a motion requesting that the Federal Court of Australia appoint a liquidator to oversee the equitable and orderly wind up of its Masters joint venture vehicle, Hydrox Holdings, as part of a liquidation process that has been initiated by its former partner in the venture, Woolworths.
Lowe’s also alleges that Woolworths has conducted the affairs of Hydrox in “a manner oppressive and unfairly prejudicial to Lowe’s, including by wrongfully and in bad faith seeking to terminate its joint venture agreement and by seeking to exclude Lowe’s from the management of Hydrox,” the company said.
The joint venture operates the Masters Home Improvement stores and the Home Timber and Hardware Group’s retail stores and wholesale distribution in Australia. Lowe’s owns one-third of the venture and Woolworths owns two-thirds as well as controlling the board of directors and day-to-day operations. The joint venture agreement was signed in 2009, and the first Masters stores were opened in the second half of 2011 and now exceed 60 stores.
Lowe’s stated, “Despite every effort to reach a fair resolution with its joint venture partner, Lowe’s has been left with no other option but to seek the guidance of the court to achieve an equitable and orderly wind-up of the Masters business. Lowe’s has acted in good faith at every stage in both the development and operation of Masters, and has been at all times an engaged investor, a committed partner and proud employer. On the other hand, Woolworths has engaged in oppressive conduct, including by invalidly and in bad faith attempting to terminate the joint venture.”
As previously announced, Lowe’s notified Woolworths in January of 2016 of its intent to exit the home improvement retailing joint venture in Australia. By exercising that option held under the venture arrangement, Woolworths is contractually obligated to pay to Lowe’s its fair value of its ownership stake, according to Lowe’s.