MADRID (Reuters) - Spain's High Court will investigate allegations that Russian tycoon Mikhail Fridman acted to depress the share price of DIA DIDA.MC when trying to take control of the supermarket chain, a court document seen by Reuters showed.

FILE PHOTO: Russian businessman, co-founder of Alfa-Group Mikhail Fridman attends a conference of the Israeli foundation Keren Hayesod in Moscow, Russia, September 17, 2019. Pavel Golovkin/Pool via REUTERS

Fridman’s LetterOne fund denied the allegations on Tuesday, saying in a statement they were “untrue and defamatory”.

LetterOne rescued DIA from the brink of insolvency this year after the retailer’s market value fell by 90% in 2018 as it lost out to rising competition.

Spain’s Supreme Court gave the High Court a mandate to investigate anonymous accusations which it said indicated Fridman may have acted to manipulate prices, engaged in insider trading and damaged the interests of minority shareholders, the court document seen by Reuters showed.

“The reality is that DIA has suffered from mismanagement and previously disclosed accounting irregularities that have negatively impacted all shareholders, including LetterOne,” LetterOne said in a statement emailed to Reuters.

The court document cites a police report alleging that Fridman acted in a coordinated and concerted way through a network of corporations to create short-term illiquidity in the company and lower the share price before launching his takeover.

“According to the accusation, LetterOne Investment Holdings (directed by Fridman), shareholder in DIA, maintained a heightened financial tension to lower the share price before buying the company,” said the court document, dated Sept. 18.

As part of the bid, which raised its stake to 70%, LetterOne loaned DIA 490 million euros ($546 million) and struck deals to extend debt agreements and set up new credit lines with banks.

“We have backed DIA and have committed to invest 1.6 billion euros to protect jobs and suppliers, keep stores open, and rescue this Spanish retailer,” LetterOne said.

DIA shareholders met on Tuesday and approved a capital hike, the proceeds of which will be partially used to pay back LetterOne’s loan.

Fridman appeared in court in Madrid on Monday as part of a separate case, in which judges are investigating the bankruptcy of digital entertainment firm Zed Worldwide. He denied all charges in that case in a statement on Monday.