14th Nov 2024 11:12
(Alliance News) - boohoo Group PLC, an online fashion retailer, on Thursday said raised just under GBP40 million from an oversubscribed placing and subscription of new shares.
The capital infusion is intended to strengthen boohoo's balance sheet as it faces mounting pressure from its largest shareholder, Frasers Group PLC, which has been pushing for its own founder and majority shareholder, Mike Ashley, to take over as the boohoo chief executive officer.
The Manchester-based owner of PrettyLittleThing, Karen Millen and Debenhams, raised GBP39.3 million through an oversubscribed share placing and subscription, priced at 31 pence per share, a 3.3% premium over its closing price of 30p on Wednesday in London.
boohoo shares were up 0.5% at 30.10p on Thursday morning.
The funding round saw strong investor interest, boohoo said, with the company raising GBP33.3 million through the firm placement and subscription of 107.6 million new shares, and an additional GBP6.0 million from 19.4 million shares available via a retail offer, set to close on Friday.
Frasers Group, which holds a 27% stake in boohoo, subscribed for 39.1 million of the new shares, part of which is subject to clawback.
boohoo plans to use the proceeds to reduce debt and bolster its balance sheet as it fends off mounting pressures from Frasers to install Mike Ashley, its own founder and majority shareholder, as boohoo's chief executive.
The board has strongly advised shareholders to oppose the move, citing Frasers' "self-interested" intentions.
In announcing the equity raise after the London market close on Wednesday, boohoo also confirmed its interim results, revealing worsened financial health, with a bigger half-year pretax loss of GBP147.3 million compared to GBP36.6 million a year earlier, alongside a 15% decline in revenue.
Despite the losses, CEO Dan Finley said: "We are pleased with the strong support from our existing shareholders as we move into the next stage of growth. We believe the retail offer will also allow smaller shareholders the opportunity to participate."
The escalating conflict between boohoo and Frasers is set to reach a critical point at an emergency meeting scheduled for December 20.
By Eva Castanedo, Alliance News reporter
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