Boohoo calls meeting, urging shareholders to reject Frasers calls – and raises £45.3m

Manchester online fashion retailer, boohoo, has urged shareholders to reject a bid by its biggest shareholder, Frasers Group, to oust its new chief executive, Dan Finley, and take control of the business, at a general meeting to be held in Manchester on December 20.

It follows a move last month by Frasers, which holds 27.1% of the retailer, to unseat the then CEO, John Lyttle – who had already announced his intention to stand down – and install Frasers and Sports Direct founder Mike Ashley as a director and CEO, and Mike Lennon as a director.

In an open letter to shareholders calling for a general meeting, Frasers claimed there was a “crisis” at boohoo, pointing out that the firm’s revenue for the six months to the end of August was down 36.5% and saying that when it publishes its half year results this month, gross profit will down for the sixth consecutive reporting period.

It also criticised a £222m debt refinancing deal and claimed the boohoo board had previously ignored its concerns.

Boohoo rejected all the Frasers claims and, in a snub, appointed Dan Finley as its new CEO days later.

Now, boohoo has granted the general meeting, but urged shareholders to reject Frasers demands in a six-point rebuttal.

It insists 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 Frasers appears intent on disrupting boohoo’s business review and acting only in its own commercial self-interest, adding Frasers has prior history of this sort of corporate behaviour.

Boohoo also claims its shareholders are being offered no protections in relation to the obvious risks presendd by Frasers’ demands, adding that Mike Ashley is “conflicted and not a suitable appointment to the board”.

The group goes on to say that Mike Lennon is a practicing insolvency expert with a history of working closely with Frasers and that shareholders should ask themselves why Frasers would want him in situ at boohoo.

And it insists that the boohoo board is not deliberately seeking confrontation with Frasers, but will at all times act in the best interests of the company and all shareholders.

Dan Finley 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 also announced this morning that it has raised £39.3m in an oversubscribed placing and subscription, launched at 5.23pm yesterday. This will provide the group with gross proceeds of £33.3m.

In addition to the placing and subscription, boohoo is providing shareholders with the opportunity to subscribe for up to 19,354,838 Retail Offer Shares to raise up to approximately £6m.

Dan Finley said: “We are pleased with the level of support from our existing shareholders for the business in its next stage of growth. We trust that the Retail Offer provides smaller shareholders the opportunity to participate also.”