Sports Direct limbers up for Blacks clash after buying up shares

Britain's biggest sports clothing group has been locked in a dispute with Ernst & Young, the administrator of collapsed bank Kaupthing Singer & Friedlander, over the ownership of the Blacks stake and an 11 per cent holding in JD Sports Fashion since October 2008.

But yesterday the firm said E&Y had sold the stakes to its Sportsdirect.com retail subsidiary and it "currently intends to vote against the resolutions proposed" at Blacks' shareholder meeting.

Blacks, whose history stretches back to the 1860s, when Thomas Black set up a sail-making business in Greenock, has said its 20 million fundraising plans – due to be voted on at tomorrow's meeting – mark the "crucial growth phase" of its recovery after a deal with landlords in November helped secure its future.

The group, which operates under the Blacks and Millets banners, is planning up to 35 new stores and the refurbishment of existing sites.

Sports Direct, which is controlled by Newcastle United owner Ashley and operates the Sports World chain, did not give a reason for its aims to scupper the Blacks fundraising.

However, it did say the decision to vote against the plans was "subject to review and final determination by the board of directors" before the meeting.

The ownership dispute is in the hands of the courts and is thought to be set to continue regardless of the share acquisition. Blacks requires 75 per cent of the shareholder vote for its fundraising plans. It said last night it was seeking "further clarification" of Sports Direct's intentions.

Kate Heseltine, an analyst at stockbroker Seymour Pierce, said she continued to view the business as being "in a substantially stronger position" following its deal with landlords.

"Although this may prove detrimental to Blacks' restructuring plans, there is presently insufficient information, or indeed certainty over the outcome of such ownership disputes, to alter our view on Blacks," she noted. Sportswear firms in the UK have a habit of buying strategic stakes in their rivals, with Sports Direct one of the industry's most prolific share owners.

The firm suffered a 53.1m write-down on the assets held in Blacks and JD last July after Kaupthing, its Icelandic banking partner that had partly funded the holdings, went into administration.

As part of Black's recent rescue deal that preserved more than 4,000 jobs, Bank of Scotland, now part of Lloyds, took a 5 per cent stake in the outdoor clothing chain, which has its headquarters in Northampton.