Boohoo raises £40m amid ongoing spat with Mike Ashley

18th Nov 2024 10:00

(Sharecast News) - Troubled fast-fashion retailer Boohoo on Monday confirmed it had managed to raise around £40m in funding to bolster its balance sheet amid a row with major shareholder, Mike Ashley's Frasers Group.

The company raised approximately £38.9m from institutional investor subscriptions and £0.4m from retail investors.

Ashley, whose empire started with the Sports Direct discount chain, has demanded a seat on the Boohoo board after also insisting he be installed as chief executive as being snubbed in favour of a company insider. The retailer has responded by asking shareholders to reject this, saying he is "not suitable" for such a role.

"Frasers and Mike Ashley have history of exerting pressure on competitors, and shareholders should be concerned about the possibility of Mike Ashley joining our board," it said in a circular to shareholders last week.

Frasers has accused Boohoo of mismanaging the business and was highly critical of a £222m refinancing. Investors will vote on Ashley's appointment, as well as restructuring specialist Mike Lennon, on December 20.

Matters escalated after Boohoo announced last that week that it had appointed Dan Finley - the current boss of Debenhams - as its new chief executive.

"The board is also committed to ensuring it takes the right steps to drive the group in the interest of all shareholders and not just Frasers' self-interest."

Boohoo went on to point out that Frasers is not an independent shareholder in the group, focused solely on the value of its investment, calling it a "trade competitor that is seemingly focused on its own commercial self-interest.

Boohoo noted that many of Frasers' brands compete with its own brands, including Boohoo, PrettyLittleThing and Karen Millen.

"Debenhams is also a leading competitor of House of Fraser, and Frasers was the largest shareholder in Debenhams prior to it being acquired, as well as being a competing bidder when boohoo acquired Debenhams in 2021," it said.

In addition, Boohoo made the point that Frasers has a large interest in Asos, which also competes with its brands.

"Frasers also has a well-publicised history of making significant investments in other UK retailers which also compete with Boohoo," it added.

"The board considers it wholly inappropriate for Frasers to seek to leverage its significant shareholding in boohoo and other UK retailers to promote its own commercial self-interest, such as Frasers PLUS, at the expense of the other shareholders and will take all steps necessary to protect its commercial position and shareholders best interests."

Reporting by Frank Prenesti for Sharecast.com