In The Style recommends sale to Bidco for £1.2m, or face administration
Manchester fashion retailer, In The Style, has agreed a deal to sell itself, for £1.2m, following the conclusion of its strategic review, otherwise it could face administration.
Last December it announced the launch of the review which it said could result in a sale of all or part of the company.
The Salford-based company floated in March 2021, with a market value of £105m but its share price has since fallen by 95%.
In a statement, the company said: “The board believes that there has been limited liquidity for In The Style’s shareholders for some time and that the current market capitalisation of the company does not properly reflect the underlying growth potential of the group which may be better realised under an alternative ownership structure.”
Today (March 7) the business announced that, during the strategic review, it received a deliverable offer for ITSFL (In The Style Fashion Ltd) from Baaj Capital, a UK-based, private family office.
This offer included a pre-condition that In The Style founder and chief executive Adam Frisby agreed to take an equity position in ITS Holdings 2023 Limited, a newly established company formed for the purposes of the sale, equivalent to his current holding in the company and to also become chief executive of ITSFL on completion of the sale.
Jim Sharp, chair of In The Style, said: “Following a thorough review of different strategic options with our advisers and interactions with numerous parties, the independent directors have unanimously concluded that it is in the best interests of the company, its shareholders and its stakeholders to sell In The Style Fashion Limited to Bidco.
“The independent directors, therefore, believe that under the new ownership structure – with Adam’s continued leadership and Baaj’s backing – the In The Style brand can continue to build on its potential whilst protecting the interests of the group’s employees, suppliers and other stakeholders.”
The Bidco is wholly-owned by Jaswinder Singh, the founder and principal of Baaj, however, Adam Frisby has agreed, conditional only on completion, to subscribe for new equity in the capital of Bidco representing approximately 23%. of the voting rights of Bidco.
In The Style also published a trading update today, saying that the trading environment through January and February remained challenging as was anticipated following the Christmas period, reflecting cost-of-living pressures on customers, high levels of markdown and a reduction in wholesale demand.
As was stated in the trading update on January 20, 2023, the board expects revenue for the full year to March 31, 2023, to be in the region of £46m. The adjusted EBITDA loss for the year is likely to be towards the higher end of the previously guided range of between £4.25m to £4.75m.
The company’s cash position at December 31, 2022 and February 28, 2023, was £3.2m and £0.9m respectively. At both dates, the invoice discounting facility of £0.4m remained undrawn.
As a result of this expected reducing cash balance and the expectation that the trading environment will remain challenging in the near term, the board is of the opinion that, in the absence of raising further funds or completion, there would be no alternative other than the company and ITSFL to enter into administration or some other form of insolvency procedure in due course.
Last month The High Court in Manchester ruled in favour of Adam Frisby in his case against Paul Clements, who had falsely claimed the name and concept of In The Style was his idea.
In dismissing the proceedings, the Judge found that Clements played no part in the idea or development of In The Style and concluded it “likely” that In The Style’s stock-market flotation “formed the motivation” for Mr Clements asserting a claim against Adam Frisby.
Following the case, Frisby said: “After what has been the most difficult and unimaginable few months of my life, I am so pleased and relieved that today the judge and the High Court have rightly ruled in my favour.”
Russ Mould, investment director of AJ Bell was scathing. He said: “In The Style becomes the latest flop IPO in the UK, with the operating business set to be sold for a mere £1.2m and the shares to delist from AIM.
“Trading has been awful and its finances as robust as a soggy Weetabix.
“The fashion retailer floated on the UK stock market almost two years ago to the day, valued at £105m. It didn’t take long for the problems to appear and the departure of the chief executive at the end of 2022 effectively marked the captain jumping off board before the whole ship sank.”