Online fashion group boohoo has urged shareholders to reject calls from its biggest shareholder to replace its newly-appointed CEO.
The increasingly acrimonious dispute between boohoo and Frasers Group has had more twists and turns than a Jeffery Archer novel.
Last week Frasers, which owns 27 per cent of boohoo’s issued share capital, sent another open letter to boohoo’s board following the appointment of Dan Finley as John Lyttle’s successor as CEO – contrary to their demands to make Mike Ashley chief executive.
Boohoo’s board has unsurprisingly responded by calling on shareholders to vote against of the resolution in a strongly-worded six-point statement and insisted ‘conflicted’ Ashley would be the wrong choice as CEO.
The statement read:
“1. The board has a credible plan to unlock and maximise value for the benefit of all shareholders through its business review and in Dan Finley has the right CEO to lead the business.
“The board was unanimous in Dan’s appointment and he has long been identified as the successor to CEO following his work for the Group as CEO of Debenhams.
“2. Frasers appears intent on disrupting boohoo’s business review and acting only in its own commercial self-interest. Frasers has prior history of this sort of corporate behaviour.
“The board is concerned that Frasers is using its significant shareholdings in UK retailers, including boohoo, to further its own self-interest at the expense of other shareholders.
“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?
“3. Shareholders are being offered no protections in relation to the obvious risks presented by Frasers’ demands.
“The board has stated as a matter of public record that it is open to Frasers’ having board representation in the form of a single non-executive director appointment and has repeatedly requested that Frasers provide appropriate safeguards to manage the obvious conflicts of interest that exist and will arise.
“4. Mike Ashley is conflicted and not a suitable appointment to the board.
“Mike Ashley is the controller of Frasers, with a 73 per cent shareholding, and is listed by Frasers as having a significant influence over its day-to-day decision making.
“The board considers Frasers to be a competitor of all of boohoo’s core brands across its own brands and investments.
“Frasers and Mike Ashley have history of exerting pressure on competitors and Shareholders should be concerned about the possibility of Mike Ashley joining our board.
“5. Mike Lennon is a practicing insolvency expert with a history of working closely with Frasers. Shareholders should ask themselves why Frasers would want him in situ at boohoo.
“6. The board is not deliberately seeking confrontation with Frasers, but will at all times act in the best interests of the company and all shareholders.
“The board has not ‘stonewalled’ Frasers, despite their accusations to the contrary.”
Newly-appointed CEO Dan Finley said: “I reiterate the commitment I made on my appointment to working to unlock significant value for all shareholders. We are taking decisive steps to deliver on this promise and will continue to do so during the coming months as I begin replicating the success I achieved at Debenhams.
“We have outlined in the circular posted today why the proposals from Frasers are not in the best interests of all shareholders, and we look forward to receiving shareholder support and maximising value for all shareholders as we move forward.”
Earlier today boohoo announced it had raised additional funds of £39.3m.