The AIM-listed firm said Carphone Warehouse had failed to comply with its obligations under the leasing contract, which, in turn, had resulted in returns from the deal being “significantly below the numbers targeted”.
With discussions having proved unsuccessful, the company said it had now issued legal proceedings against the phone store chain for losses made under the contract.
Meanwhile, in a separate business update to be read out at the firm’s AGM on Friday, executive chairman Ned Montarello said the firm will return A$6mln to shareholders next month and that the company was “encouraged” by early growth in its Clearpay business in the UK, which in the four months to 31 October transacted over A$100mln of underlying sales.
However, the chairman added that sales in the group’s core leasing business remained “disappointing”, part of which was related to the aforementioned contract with Carphone Warehouse.
Investors were quick to cash out on news of the impending legal case, with the shares sinking 26.8% to 15p in early deals on Friday.