Boohoo hits back at "unfair" criticism from Frasers, quashes Ashley appointment
By Benjamin Chiou
Date: Friday 25 Oct 2024
(Sharecast News) - Fast fashion brand Boohoo has hit back at part-owner Frasers Group over its demands to urgently replace its outgoing chief executive with boss Mike Ashley, suggesting that any such appointment could be a conflict of interest.
Boohoo urged shareholders to take no action in respect of Frasers' proposals.
After an open letter by Frasers on Thursday claimed Boohoo was not willing to engage in discussions about appointing a Frasers-approved candidate to the board, Boohoo said it was only notified of Frasers' requests last week.
What's more, Boohoo said that Frasers had actually formally ruled out Ashley for the role on 9 October and previously indicated that any nominee would perform in a non-executive function.
"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," Boohoo said in a statement on Friday.
The brand said it was clear with Frasers that "appropriate governance" would be used when making any board appointment to protect its commercial position and shareholder interests.
Boohoo CEO John Lyttle announced his resignation from the board after five years last week, with a succession process already underway prior to discussions with Frasers, Boohoo said. The company confirmed that Lyttle would stay in his role until the conclusion of the process.
Frasers also launched a stinging attack on Boohoo's recent £222m debt refinancing, claiming that the terms agreed were "wholly unsatisfactory", claiming that the company didn't explore alternative solutions.
However, Boohoo said the characterisation was "inaccurate and unfair", adding: "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 is expected to publish its interim results in November. "In the meantime, shareholders are strongly advised to take no action in respect of Frasers' proposals," the company said.
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