Fashion retailer Boohoo has issued a response to Frasers Group’s attempt to shape the business, including a demand that Mike Ashley be installed as chief executive.
Frasers has demanded an emergency meeting of Boohoo shareholders to appoint its founder, controversial billionaire tycoon Ashley, to the top role and as a director.
Frasers claimed that Boohoo, in which it has a 27% stake, faced a “leadership crisis” and made other criticisms, including about Boohoo’s debt refinancing.
In its response, Boohoo cautioned about governance concerns over Ashley’s involvement at board level. Boohoo said: “As shareholders will be aware, Mr Ashley is a 73% shareholder in Frasers; in addition, Frasers owns a 23.6% stake in Asos, and both Frasers and Asos operate in similar markets to Boohoo. These are important facts that need to be taken into account and carefully considered by the board.
“Whilst the board remains willing to discuss board representation with Frasers in a constructive manner, it has been clear with Frasers that before any appointment can be made, appropriate governance will be required to protect the company’s commercial position and the interests of other shareholders. Boohoo has sought assurances from Frasers in this regard and they have not to date been provided.”
Boohoo said it would not be rushed into a decision about finding a replacement for departing chief executive John Lyttle. It said: “The separate appointment of a CEO is a critical board decision which requires careful consideration and proper governance. A process, overseen by the board, and which started prior to the meeting with Frasers on October 18, is well underway and John Lyttle will remain in the role until its conclusion.”
Boohoo rejected Frasers’ take on its debt refinancing as “inaccurate and unfair”. It said: “The refinancing provides certainty for the company around its future requirements and is supported by its existing group of high street banks.
“The company’s approach to its recent debt refinancing was discussed on numerous occasions with Frasers and its advisers. As part of those discussions Frasers were advised that the board would be pleased to consider any alternative proposals they might wish to present, but none were forthcoming.”
Boohoo, which will release interim results next month, urged shareholders in the meantime “to take no action in respect of Frasers’ proposals”.
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