The increasingly acrimonious dispute between boohoo and its biggest shareholder has taken a new twist.
Frasers Group, which owns 27 per cent of boohoo’s issued share capital, has written a further open letter to the board of the Manchester-headquartered online fashion retailer.
It follows last week’s appointment of Dan Finley as John Lyttle’s successor as CEO – contrary to demands from Frasers Group that Mike Ashley be made chief executive.
In the latest open letter Frasers Group has asked boohoo to publicly confirm it will not make any disposals of its assets – which include the Debenhams and Karen Millen brands – without prior shareholder approval.
The letter, which is signed by company secretary Robert Palmer, claimed: “The directors have pushed boohoo into a terrible refinancing, while refusing to engage properly with Frasers on it.
“They have then rushed out a CEO appointment to try to block the say of shareholders. This has to stop. What will they try next? Desperate people do desperate things.”
The letter also repeats its call for boohoo not to dispose of any of its assets without first engaging with Frasers on alternative options.
It stated: “Given the market headwinds and commercial difficulties that boohoo is currently facing, any asset disposals by the company, including of any of its five core brands or the Soho office, would be executed from a position of weakness and unquestionably be at a discounted valuation, and would therefore be wholly unacceptable without prior shareholder approval.
“The board has refused to meaningfully engage on Frasers’ request. The board has had an opportunity to confirm that it is not intending to make any such disposals, but has not done so.
“In light of this, Frasers now makes its position very clear: the board must urgently and publicly confirm that: – boohoo will not make a disposal of any asset or business line, in whole or in part, without prior shareholder approval; and – prior to agreeing to any such disposal, the board will obtain and publish the confirmation of an independent global adviser / investment bank that the terms of the disposal are fair and reasonable, the disposal has been conducted at arm’s length and the disposal is in the best interests of boohoo’s shareholders.
“We remind each member of the board to carefully consider their legal and regulatory duties, in particular their duty to act honestly and in good faith in the way most likely to promote the success of the company for the benefit of its members as a whole.”
The strongly-worded letter became increasingly personal by naming individual board members.
It states: “We also remind them of their duty to act fairly as between shareholders. Any disposal of boohoo’s assets in breach of these duties, including any disposal that may occur at an undervalue and/or potentially to related parties of Mr. Kamani, could expose the directors to personal liability to boohoo, and Frasers and other shareholders would be forced to consider our legal rights of redress.
“In particular, we ask each of the non-executive directors on the Board, namely Alistair McGeorge, John Goold, Tim Morris, Kirsty Britz and Iain McDonald to consider their personal duties.
“If it turns out that they have breached those duties, Frasers will not hesitate to push for legal action against them personally. Shareholder voices must be heard.”
Boohoo have yet to respond to the latest open letter.