Boohoo Group Plc raised £39.3 million ($49.8 million) in an attempt to help turn around the struggling business, while urging investors to reject billionaire Mike Ashley’s demand to be installed to the board.
The British fast-fashion retailer completed a share placing and subscription, £6 million of which will be replaced through a retail offer, subject to demand, it said in a statement Thursday.
The equity raise came after Boohoo revealed on Wednesday evening that adjusted pretax losses had widened to £27.4 million in the six months ended Aug. 31, from £9.1 million a year earlier.
“The announcements highlight to us, a currently struggling business but also one with a couple of high potential divisions if the strategy can be sustainably adjusted,” wrote Clive Black, head of consumer research at Shore Capital, which downgraded Boohoo from hold to sell.
Shares were little changed in early trading, having lost more than a quarter of their value since the start of the year.
Boohoo also called on shareholders to vote against Frasers Group’s demand for a seat on its board and accused the company — founded by Ashley — of acting only in its own commercial self-interest. “Frasers has prior history of this sort of corporate behaviour,” it said.
Frasers is Boohoo’s largest shareholder with a 27 percent stake, according to data compiled by Bloomberg. The company blames Boohoo’s board of presiding over “abysmal” trading, while criticising a £222 million debt refinancing deal.
Boohoo spurned Ashley’s earlier demand to be installed as chief executive officer of the retailer when it appointed insider Dan Finley, former head of Debenhams, as CEO.
Boohoo co-founder Mahmud Kamani, some of his relatives and Frasers all participated in the latest fundraising round.
A spokesperson for Frasers declined to comment.
By Jennifer Creery
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Boohoo Rejects Criticism From Frasers Group as ‘Inaccurate and Unfair’
Boohoo has criticised Frasers Group’s attempt to install founder Mike Ashley as CEO, defending its debt refinancing strategy and emphasising the need for careful governance in leadership decisions.
