Boohoo Group Plc announced a £175m refinancing deal this morning, leading to a 15% rise in its share price in today’s trading.
However the terms of the fast fashion retailer’s deal have raised a few eyebrows – especially as it is a household name.
The listed firm, which now trades as Debenhams Group, extended its financing facility amid speculation over a delay in publishing its full-year results. The three-year facility gives it access to funding of up to £175m and extends to August 2028, replacing its previous £125m revolving credit facility, which was originally due to mature in October 2026.
#The new facility is provided by a number of financing parties, led by TPG Angelo Gordon. The interest rate has increased to the Bank of England base rate plus 7.3%.
Gareth Smythe (below), CEO at M&A specialist Hilton Smythe, pulled no punches in his analysis of the deal – and said that it makes the group a sitting target for a takeover.
“In my view, this refinancing lays bare just how inadequate the existing facility was. Otherwise Debenhams wouldn’t be scrambling to refinance early – and for a larger sum – before the old one had even matured,” he told BusinessCloud.
“Refinancing at base plus 7.3% is eye-wateringly expensive for a household name and underlines just how much risk lenders see in the business. Companies don’t normally lock into costly debt this early unless they’re worried about being shut out of the market later.”
Boohoo has seen its share price drop in recent months. It is down 39% in the year to date at the time of writing.
We recently reported how speculation is growing on exactly when the under-pressure retailer will publish its full-year results for the 12 months to February 28th, 2025. It has until the end of August to do so.
Last year boohoo – which serves millions of customers across its Debenhams, Karen Millen, boohoo, MAN and PLT brands – published its results for the 12 months to February 29th, 2024, on May 8th – sparking wild speculation as to the reasons for the apparent delay. Analysts have become nervous by the growing uncertainty over the group’s apparent lack of financial visibility.
Then last week Frasers Group plc, Boohoo Group PLC’s largest shareholder, called for the suspension of boohoo founder and executive vice chair Mahmud Kamani and an independent investigation following a report in the Telegraph alleging misconduct in relation to loans made to suppliers to boohoo.
“The unrest isn’t usually just noise: it’s a clear signal that control of the company could very well slip from the founders’ hands,” says Smythe. “ A plunging share price, a founder under scrutiny and its largest shareholder openly calling for suspensions and investigations – all signs of a serious challenge ahead.
“Investors hate uncertainty and this kind of governance storm is exactly what opportunistic bidders look for. While this might attract outside attention, businesses that maintain clear governance, open communication and robust financial planning stay in control and can respond strategically.”
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Smythe says the scrutiny cannot be blamed on the wider health of the online fashion sector.
“Debenhams’ problems can’t simply be blamed on the online fashion sector,” he countered. “Take Shein: while it overtook Boohoo and was closing in on Asos last year, it shows there’s clear demand and profitability in the market.
“The real issue is how Boohoo is being operated: competitors and shareholders have raised repeated concerns about governance. And is it a coincidence the company has had to refinance early, for a bigger facility, against this backdrop of growing mistrust? I don’t think so.
“For retailers more broadly, the lesson is clear: the sector works, but only with the right leadership, structure and strategy.”
Earlier this year a bid by the company to rebrand the corporate name of the listed holding firm to Debenhams Group PLC was narrowly defeated by shareholders, led by Frasers.
It was the latest move in a long-running feud between Mahmud Kamani and Frasers boss Ashley, which came to a head in January when the latter failed to have Kamani removed as a director of boohoo.
Debenhams Group CEO Dan Finley said this morning: “We have put in place a new facility, 12 months early, with strong lenders, that aligns and supports our new strategy – supercharging Debenhams and turning around our youth fashion brands.
“This follows a comprehensive and competitive review of the market.”
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