Boohoo has this morning released a response to Fraser Group’s open letter, calling for Mike Ashley to become its CEO.
The letter also accused the Manchester online fashion group of having lost the ability to manage its business and investments.
“While the Board of boohoo continues the process of reviewing the requisitions with its advisers, it is issuing this announcement to give clarification on certain matters raised by Frasers,” it told the Stock Exchange.
“The Board is focused on ensuring it takes the right steps to drive boohoo Group in the interest of all shareholders. As announced on 18 October 2024, it is proactively reviewing options for each division to unlock and maximise shareholder value for all shareholders.”
It added that it hadn’t been “stone-walling” in regards Fraser Group’s requests:
“The Board has neither delayed responding to Frasers’ requests for Board representation nor ignored them.
“Frasers’ wish for Mike Ashley to be appointed as a Director and Chief Executive Officer was first communicated by Frasers to boohoo at an in-person meeting on the evening of Friday 18 October 2024, when Frasers sought to establish a 48-hour deadline for the Board to confirm that it would proceed to make this appointment. This was the first occasion on which Frasers had identified its preferred Board candidate and followed Frasers having formally ruled out Mr Ashley for the role on 9 October 2024 and having previously and consistently indicated that its one nominee would perform a non-executive role.”
It continued:
“As shareholders will be aware, Mr Ashley is a 73% shareholder in Frasers; in addition, Frasers owns a 23.6% stake in ASOS plc, 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.”
Specifically on the role of CEO, it said this was a “critical Board decision” which required “careful consideration and proper governance” and this process was well under way.
Finally, it turned to criticism of its £222m debt facility, which Fraser Group called “severely short dated” and “seemingly more expensive than the previous financing arrangement.”
“Frasers’ characterisation of boohoo’s recent debt refinancing is inaccurate and unfair,” Boohoo stated.
“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.”
It concluded that its Interim results are out next month and that its shareholders were “strongly advised” not to take any action in regard to Frasers’ proposals.
