- Revolution in row with growth trust Chrysalis
- No legal proceedings launched yet
- New management looking to turn Revolution round
Shares in Revolution Beauty (REVB:AIM) cheapened 2.7% to 29.2p on Friday after the troubled makeup company insisted it ‘strongly contests’ allegations made against it by former shareholder Chrysalis Investments (CHRY).
This week (29 January), the board at investment trust Chrysalis said it has ‘certain potential claims’ against the self-styled ‘multi-channel mass beauty innovator’ for actions of ‘deceit, negligent misstatement and/or misrepresentation’.
These relate to the growth capital fund’s purchase of Revolution Beauty shares in July 2021 and their subsequent sale at a loss in late 2022.
Chrysalis took a near-£40 million hit when it finally offloaded its stake in the scandal-hit cosmetics firm, having bought for £45 million and sold it for a mere £5.7 million.
SPAT TURNS UGLY
In its full year results statement, Chrysalis explained its original share purchase was made ‘on the basis that information provided to the company by Revolution prior to the company’s purchase of the shares in Revolution, and during the period in which the shares were held prior to their sale, contained misstatements and material omissions.’
Chrysalis continued: ‘The company wrote a formal letter of claim to Revolution Beauty on 22 November 2023, which requested a response within 28 days. A response has recently been received asking for a further 28 days to provide a response. The company is now considering next steps with its retained lawyers, Travers Smith.’
COMING OUT FIGHTING
But in a short statement today, Revolution Beauty confirmed a pre-action letter from Chrysalis has been received, although the latter has not commenced formal legal proceedings.
The company said it ‘strongly contests’ the allegations and has been ‘engaging with Chrysalis’s advisers accordingly’.
Future shares tank as CEO Jon Steinberg makes an early exit
The embattled firm, whose affordable cosmetics brand you’ll find on the shelves in Boots and Superdrug among others, has been a disaster since joining the stock market in 2021, beset by an accounting probe, temporary share suspension and a boardroom bust-up.
However, the new management team of CEO Lauren Brindley and CFO Neil Catto, the former finance director of Revolution Beauty’s major shareholder Boohoo (BOO:AIM), are attempting to turn the business round.
