Boohoo has urged its shareholders to reject Mike Ashley’s demand to be placed in charge of the struggling fast fashion group, saying that that Ashley is “not suitable” and subject to conflicts of interest due to his role at Frasers.
Boohoo and Frasers have been engaged in a public disagreement over how to take the company forward for the last month.
Frasers has accused the retailer of “long-term mismanagement” which has led to “value destruction“, and has criticised its £222mn refinancing, while Boohoo has called Frasers’ take on the business “inaccurate and unfair”.
While Ashley’s bid to become chief executive suffered a blow last week when Boohoo appointed Dan Finley to the role, investors will be able to vote on whether to appoint Ashley, as well as restructuring specialist Mike Lennon, to the board on December 20.
In a statement in a circular to investors, Boohoo urged its shareholders to vote against the resolution.
“The board has a credible plan to unlock and maximise value for the benefit of all shareholders through its Business Review and in Dan Finley has the right CEO to lead the business,” it said.
It argued that Ashley and Frasers have “attempted to exert influence over the Board’s refinancing, Business Review and appointments to the board for the good of themselves alone, and are acting in their own self-interest.”
Boohoo said: “Frasers has prior history of this sort of corporate behaviour shareholders should ask themselves what Frasers’ true intentions are, and why is it apparently seeking to disrupt the Business Review. Is it purely to maximise value, or is there an ulterior motive to acquire boohoo’s assets for below market value?”
Dan Finley, chief executive officer of boohoo, said: “I reiterate the commitment I made on my appointment to working to unlock significant value for all shareholders. We are taking decisive steps to deliver on this promise and will continue to do so during the coming months as I begin replicating the success I achieved at Debenhams.
“We have outlined in the circular posted today why the proposals from Frasers are not in the best interests of all shareholders, and we look forward to receiving shareholder support and maximising value for all shareholders as we move forward.”
Boohoo announces £40m fundraise
Separately, Boohoo announced a fundraise of £39.3m, which this morning it said had been “significantly oversubscribed“.
It has also announced its half-year results.
Revenue fell 15 per cent in the first half of the year, from £619.8m to £729.1m, and adjusted loss before tax was £27.4m, from £9.1m last year.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 10.5 per cent, from £31.3m to £20.8m.
Net debt increased from £35m to £143.1m, and Boohoo said it saved £128m in operating costs year on year.
The company said it expected higher returns and a stronger adjusted EBITDA performance in the second half of the year.