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Wed 23 Sep 2015 09:47 AM

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Shareholder in Spain's El Corte Ingles to file legal action against $1bn Qatari deal

Retailer's minority shareholder Corporacion Ceslar is opposed to investment by former Qatari prime minister Sheikh Hamad Bin Jassim Bin Jaber Al Thani

Shareholder in Spain's El Corte Ingles to file legal action against $1bn Qatari deal

Corporacion Ceslar, minority shareholder of Spanish department store chain El Corte Ingles, will file a court appeal next week against changes in company rules that allowed a 1 billion euro ($1.1 billion) Qatari investment in the group.

El Corte Ingles ousted Ceslar from its board last month after the shareholder publicly objected to the deal. Ceslar would also appeal the board's decision to take away its board representation, a spokesman for the shareholder said.

Former Qatari prime minister Sheikh Hamad Bin Jassim Bin Jaber Al Thani bought in July a 10 percent stake in the privately-owned chain, one of Spain's biggest employers with multi-story shops selling clothing to furniture to white goods.

Ceslar objects to changes to the company's charter that allowed the release of the company's Treasury stock for the deal, structured around a three-year loan convertible into El Corte Ingles shares.

The loan has a 5.25 percent coupon payable on maturity which will convert to a further 2.25 percent of share capital, meaning the Qatari stake will eventually reach 12.25 percent.

Ceslar, a vehicle grouping the stakes of some founding family members, said after the deal was announced in July that the terms of the investment were too costly and undervalued the company.

El Corte Ingles said funds from the deal allowed it to reduce bank debt by around one third to 2.1 billion euros, slashing financial costs.

Ceslar said on Tuesday it had commissioned an independent study that valued the company at between 14.8 billion and 16.4 billion euros, twice the valuation of up to 8 billion euros implicated by the deal.

"These figures confirm that the deal implies an unjustified loss of value for shareholders," Ceslar said in a statement.

El Corte Ingles declined to comment on the matter on Tuesday.

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