Boohoo completes fundraising as it struggles to return to growth
Boohoo has raised just under £40m in a bid to turn itself around amid its public fight with the boardroom demands of an activist shareholder, Mike Ashley’s Frasers.
This morning, the company said it had conditionally raised total proceeds of approximately £39.3m. This includes £400,000 from a retail offer and £38.9m from an investor subscription.
In its latest half-year results, Boohoo announced that revenue had fallen 15 per cent, while adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 10.5 per cent and net debt increased by over £100m.
Analysts at Peel Hunt said that the cash proceeds will “strengthen [Boohoo’s] balance sheet”, but it still expects “the sale and leaseback of boohoo’s freehold property (most likely the Soho offices) to further strengthen the group’s cash position”.
The cash inflow should also give it some breathing room amid its public spat with Frasers.
Boohoo’s public spat with Frasers
Frasers has accused the retailer of “long-term mismanagement” which has led to “value destruction“, and has criticised its £222mn refinancing, while Boohoo has called Frasers’ take on the business “inaccurate and unfair”.
Ashley had attempted to become chief executive but suffered a blow when Boohoo appointed Dan Finley to the role.
However, investors will still be able to vote on whether to appoint Ashley and restructuring specialist Mike Lennon to the board on 20 December.
In a statement in a circular to investors last week, Boohoo urged its shareholders to vote against Ashely’s requests.
It argued that Ashley and Frasers, “attempted to exert influence over the board’s refinancing, business review and appointments to the board for the good of themselves alone, and are acting in their own self-interest.”
Boohoo said: “Frasers has prior history of this sort of corporate behaviour shareholders should ask themselves what Frasers’ true intentions are, and why is it apparently seeking to disrupt the Business Review. Is it purely to maximise value, or is there an ulterior motive to acquire boohoo’s assets for below market value?”