(Alliance News) - Shares in ThinkSmart Ltd plunged on Friday as it said its subsidiary RentSmart Ltd has issued formal legal proceeds against mobile phone retailer Carphone Warehouse Ltd, which is part of FTSE 250 electrical goods retailer Dixons Carphone PLC.
Shares in Australia-based ThinkSmart - which provides digital payment services - were 29% lower at 14.50 pence on Friday in London. Dixons Carphone shares were down 0.5% at 123.85p.
In ThinkSmart's core leasing business, volumes from RentSmart's Flexible Leasing contract with Carphone Warehouse remain significantly below the numbers targeted. For the year ended June 30, less than 10% of ThinkSmart's revenue were generated from Flexible Leasing.
Under RentSmart's contract with Carphone Warehouse, Carphone was under obligations for the marketing and promotion of the relevant product.
RentSmart said it has held discussions with Carphone Warehouse over the low volumes generated, and the retailer's "failure to comply with its obligations", which have been unsuccessful.
As a result, RentSmart has issued legal proceedings against Carphone Warehouse for the Flexible Leasing contract, and theUpgrade Everytime contract that preceded it.
RentSmart is seeking damages totalling GBP20 million, consisting of GBP14.5 million for flexible leasing and GBP5.5 million for Upgrade Everytime.
"RentSmart will continue to fulfil its obligations under all of its contracts including continuing to service its existing customer base and any new volumes generated under the Flexible Leasing contract and the separate SmartPlan and Upgrade Anytime contracts," ThinkSmart said in a statement.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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