boohoo claims that shareholder Frasers Group handed it a 48-hour deadline to confirm Mike Ashley as CEO last Friday evening.
Yesterday morning Frasers Group plc issued a bombshell notice to the London Stock Exchange requisitioning an extraordinary general meeting with the aim of installing the Sports Direct CEO as a director and CEO of the online fashion retailer.
Frasers, which holds around 27% of boohoo Group plc’s voting rights, also sent an open letter to boohoo citing a “leadership crisis”, “abysmal go-to-market performance” and “mis-management”.
Frasers is unhappy at what it perceives as “stonewalling” from boohoo and also the new £222 million debt financing agreement, agreed last week alongside the news that John Lyttle is to step down as CEO in the coming months.
In a measured response, boohoo refuted these claims – and said Frasers issued the ultimatum at a meeting last Friday evening, giving boohoo the weekend to announce Ashley in its chief exec role.
“The board has neither delayed responding to Frasers’ requests for board representation nor ignored them,” it stated.
“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 18th 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 9th October 2024 and having previously and consistently indicated that its one nominee would perform a non-executive role.”
boohoo notes that Ashley is a 73% shareholder in Frasers, which also owns a 23.6% stake in ASOS plc.
“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,” it continued.
“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.
“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 18th October, is well underway and John Lyttle, the current CEO, will remain in the role until its conclusion.”
It also refuted Frasers’ characterisation of boohoo’s recent debt refinancing as “inaccurate and unfair”.
“The refinancing provides certainty for the company around its future requirements and is supported by its existing group of high street banks,” it said.
“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.”