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The SurfStitch saga continues with fresh reports that investor watchdog ASIC is investigating the online surf retailer over a $20 million deal with Coastalwatch that went awry.

According to the Courier Mail, SurfStitch has confirmed it is under investigation over the collapsed deal, which forced the surfwear retailer to downgrade its earnings forecast in June.

Coastlwatch’s owner, Three Crown Investments, questioned why SurfStitch knocked back its $55 million takeover offer and has raised concerns that the company was not being forthcoming about its cash balance.

“The cash balance for the company at June 30, 2016, was reportedly $21.37 million,” Three Crown Investments managing director Joakim Sundell wrote in an open letter.

“If the company cannot meet the requirement of having a $17 million cash position, are you in fact telling us/shareholders that there has been a fall of over $4.37 million in cash reserves since the balance date? This would then only allow for another $1.6 million to $2.6 million fall for the remainder of FY17, which seems perilous.”

SurfStitch on Thursday said it did not plan to “respond to these questions and does not comment on or affirm any of the various assertions.” It will hold its annual general meeting in Sydney on November 16.

 

SurfStitch also plans to sell off its hardware company Surf Hardware International to an “indepenent third party” for $20 million.

Surf Hardware International own FCS fins amongst other brands.

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