West Coast Capital wants share offer underwritten by Tesco called off as 'it is not in the interests of shareholders'.
Sir Tom Hunter has started legal action against Dobbies' proposed £150m rights issue as he says it is not in the interest of shareholders.

Hunter – the majority shareholder with a near-30 per cent stake – is to go to court to stop dilution of his stake and block the rights issue underwritten by Tesco, which has a controlling 65 per cent.

Dobbies plans to offer new shares on the basis of six for every five existing shares, at a price of £12 a share. If Sir Tom Hunter does not take up his allocation he will see his holding in Dobbies reduced to less than 15% while taking up his shares would cost him £44m.

In what has become a highly fractious situation, both parties are standing their ground.

Dobbies said its board had 'carefully considered the merits of the open offer' and that it was in the best interests of all of its shareholders.

Its chief executive James Barnes told The Scotsman newspaper he was 'disappointed' with the instigation of legal proceedings. He stressed that without the injection of cash Dobbies would struggle to expand and that the offer would be 'earnings enhancing'.

However, Hunter's West Coast Capital is less than amused and contends that there are no earnings to be tendered.

A spokesman told The Guardian: "It doesn't take a genius to see who is benefiting from this. Dobbies wants to raise more than its current market capitalisation and they have cancelled their dividend. They say it will be earnings enhancing. Well, for who? They don't pay a dividend."

The case will be heard in Edinburgh on Monday.