boohoo Group PLC on Friday hit back at significant shareholder Frasers Group PLC, defending its debt refinancing and explaining the online retailer’s ‘commercial position’ is a factor to consider when naming a chief executive.
Sports Direct owner Frasers, which owns 27% of boohoo, wants its founder Mike Ashley, who has a 73% stake in the FTSE 100 company, to take over as CEO of boohoo to ‘restore value for all shareholders’.
Frasers noted boohoo’s ‘abysmal trading performance and share price collapse’ in yesterday’s communication.
The AIM listing said that while it ‘remains willing to discuss board representation with Frasers in a constructive manner’, it must be mindful of the fact that Frasers owns a 24% stake in Asos PLC, which operates in a similar market to boohoo.
‘Appropriate governance will be required to protect the company’s commercial position and the interests of other shareholders. boohoo has sought assurances from Frasers in this regard and they have not to date been provided,’ boohoo added.
boohoo explained that the evening of October 18 was when Frasers first communicated that it would like Ashley as CEO. ‘Frasers sought to establish a 48-hour deadline for the board to confirm that it would proceed to make this appointment.’
‘This was the first occasion on which Frasers had identified its preferred board candidate and followed Frasers having formally ruled out Ashley for the role on 9 October 2024 and having previously and consistently indicated that its one nominee would perform a non-executive role,’ boohoo added.
The company earlier in October said Chief Executive John Lyttle would be stepping down but would stay with the business whilst a successor is found and to ensure a smooth transition.
At the same time, boohoo revealed a strategic review to maximise shareholder value through assessing the different options for each division, fuelling speculation of a restructuring of the business.
It had also agreed a new £222 million debt facility with a consortium of its existing relationship banking group, which Frasers hit out at on Thursday.
Frasers said the term of the refinancing were ‘wholly unsatisfactory’, with boohoo deeming that assessment ‘inaccurate and unfair’.
Earlier this month, Frasers saw its takeover attempt of luxury fashion business Mulberry Group PLC, of which it owns a 37% stake, rebuffed as the British handbag maker referred to its offer as ‘untenable’.
Shares in boohoo are trading up 3.2% at 29.42 pence on Friday afternoon in London. However, the shares are down 21% since the beginning of the year.
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