exterior view of the Lord & Taylor flagship store on Fifth Avenue in Manhattan, New York

NOT SO FAST: The continuing spat between Hudson’s Bay Co. and activist Land & Buildings has found its way to the Ontario Securities Commission.

Land & Buildings has sought to block Hudson’s Bay’s deal with Rhône Capital, which agreed to buy 632 million Canadian dollars worth of eight-year mandatory convertible preferred shares. The transaction is tied to the retailer’s deal to sell its Fifth Avenue Lord & Taylor flagship to WeWork Cos., and the preferred shares would initially be able to be converted into common stock at a price of 12.42 Canadian dollars. (The stock closed down 1.8 percent to 11.25 Canadian dollars on the Toronto Stock Exchange on Wednesday).

Canadian market authorities conditionally approved the share issuance, but the activist appealed to have a hearing to review the decision.

Hudson’s Bay said late Thursday: “HBC believes that there is no merit to this appeal, particularly in light of the fact that written consent in support of the equity investment, from sophisticated long-term shareholders representing well over 50 percent of HBC’s outstanding common shares, has been provided to HBC and the TSX. These shareholders will benefit from, and be affected by, Rhône Capital’s investment in the same manner as all other shareholders of HBC. HBC will therefore seek to have the TSX decision confirmed and the appeal dismissed on an expedited basis, and will continue to proceed with fulfilling all regulatory requirements to close the equity investment.”

Earlier this month, Land & Buildings said in a statement that, “We are asking that the dilutive share issuance be publicly voted on by shareholders — Land & Buildings believes a majority of the non-insider shareholders should have a chance to vote on the material and dilutive Rhône transaction.”

The activist argued that the shareholders who have approved the share issuance are “conflicted” and that deal “effectively transfers meaningful and practical control of the company into a class of preferred shares that over time functionally outstrip common shareholders of their equity.”

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