Frasers Group has written an open letter to Boohoo urging them to appoint Frasers founder Mike Ashley as the retailer’s new director and chief executive following John Lyttle’s departure.
Frasers has been a shareholder of Boohoo since June 2023, and has the largest share of 27%. In the letter, the group said: “Appointing Mr. Ashley as a director and CEO of Boohoo is the best solution to Boohoo’s leadership crisis.”
It continued: “We continue to believe strongly in the potential of the Boohoo business. However, the company urgently needs to address the management of its business.”
Frasers added it wrote a letter to Boohoo’s board on October 9 to request a meeting with the group executive chair, Mahmud Kamani, to discuss the “effectiveness of the current senior team and Frasers’ proposal for Board representation”.
The group said Boohoo “ignored” the proposal on October 11, and that it recognises “stone-walling”, with “tactics of delay and ignore no longer tolerable”.
Frasers later requested the company to come back on a decision to appoint Mike Ashley by October 20, following John Lyttle’s announcement that he is stepping down.
Upon “further delays”, Frasers said it had “no choice” but to assume that the board had rejected Frasers’ proposal for board representation.
The letter also referred to Boohoo’s “abysmal” market performance, and that the terms of Boohoo’s debt refinancing are “wholly unsatisfactory”.
“Frasers considers the refinancing to be a step backward for the company and an appalling outcome for shareholders,” the letter said.
“The new £222 million facility is severely short-dated, seemingly more expensive than the previous financing arrangement and almost unquestionably leaves the company in a position of needing to undertake drastic corporate actions (whether it be disposals, deeper operational cuts, closures etc) in order to repay the term loan due in 10 months.
“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.”
Frasers is now asking shareholders to vote for Mike Ashley as director and chief executive of Boohoo, believing there is “no stronger candidate” who has the “experiences and abilities” of Ashley.
It concluded: “The action we have taken today is in the best interests of the company, its shareholders and its stakeholders.
“The Board appointments proposed by Frasers are now the only way to set a new course for Boohoo’s future. Frasers urges Boohoo shareholders to vote in favour of its proposals.”
Related Companies
- Previous
- Next
No comments yet