24th Oct 2024 09:34
(Alliance News) - boohoo Group PLC on Thursday said it is in the process of reviewing the "content and validity" of a request by its largest shareholder Frasers Group PLC for a general meeting.
Sports Direct owner Frasers said boohoo "urgently needs to address the management of its business".
Frasers owns 27% of the online fashion retailer. Frasers is requisitioning a general meeting of boohoo with an aim to add Mike Ashley, the FTSE 100 listing's own founder and majority shareholder, to the boohoo board as chief executive.
The news comes after boohoo late last week announced that CEO John Lyttle will be stepping down but will stay with the business whilst a successor is found and to ensure a smooth transition. The company also launched a strategic review and posted a fall in adjusted earnings before interest, tax, depreciation and amortisation to GBP21 million in the six months to August 31 from GBP31 million a year before.
boohoo said at the time: "The business has evolved over last few years and has an offer that is much wider than our original focus on young fashion. The time is now right to consider options with regard to corporate structure, with the aim of maximising shareholder value."
In a wide-ranging statement on Friday last week, boohoo said it believes that the group remains "fundamentally undervalued".
Frasers also wants to add Mike Lennon, an "experienced restructuring professional" to the boohoo board. boohoo earlier this month launched a strategic review amid a downturn in sales.
It also agreed a new GBP222 million debt facility with a consortium of its existing relationship banking group, which Frasers hit out at on Thursday.
"Frasers' view is that the terms of the debt refinancing are wholly unsatisfactory. Frasers considers the refinancing to be a step backward for the company and an appalling outcome for shareholders," Frasers said.
"Had boohoo engaged constructively with Frasers on the refinancing, alternative solutions could have been fully explored which may have resulted in a more favourable outcome for all stakeholders."
boohoo said: "The boohoo board is in the process of reviewing the content and validity of the requisitions with its advisers. A further announcement will be made in due course."
The Frasers announcement comes after the retailer's proposal to acquire handbags maker Mulberry Group PLC was rebuffed on Tuesday, with Frasers withdrawing its takeover approach on Wednesday.
boohoo shares were up 2.7% to 28.17 pence each on Thursday morning in London, while Frasers shares were 0.2% lower at 794.00p each.
By Tom Budszus, Alliance News slot editor
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