Boohoo to launch fundraising drive after losses triple

Boohoo has announced plans to raise £39.3 million after losses at the struggling fashion retailer more than tripled, and urged shareholders to vote against resolutions proposed by Mike Ashley’s Frasers Group.
The London-listed clothing company said it planned to launch the fundraising drive through a combination of placing new shares, subscription agreements, and a retail offer.
Boohoo said the funds raised will be used to reduce group borrowings and provide “strategic flexibility” following the company’s recent debt facility agreement. The issue price of the new shares is set at 31p, offering a premium over the previous closing price.
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The move comes as Boohoo battles declining sales amid stiff competition from ultra-fast fashion rivals such as Shein, raising the prospect of a break-up of the mini retail empire whose collection also spans PrettyLittleThing, Dorothy Perkins, Burton, Warehouse and Wallis.
Group revenues declined by 15 per cent to £619.8 million in the six months to the end of August, while losses before tax widened to £147.3 million from £36.6 million, according to interim results published on Wednesday.
Boohoo also issued a circular urging shareholders to vote against resolutions proposed by Frasers at its general meeting to be held on December 20, citing concerns over Frasers’ past behaviour and intentions.
The resistance to Frasers’ proposals is likely to anger Ashley. The billionaire founder of Frasers, which has a 27 per cent stake in Boohoo, has been lobbying for a seat on the board after it launched a strategic review of its operations and an unexpected £222 million debt refinancing.
Boohoo said investors 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?”
Frasers had said it wanted to join the board as it was concerned that Mahmud Kamani, Boohoo’s co-founder and chairman, would buy back Boohoo and some of its brands at a cheaper price. Kamani, along with his son Umar, owns about 15.5 per cent of the shares.
Kamani confirmed publicly, however, that he had “no intention” to make an offer for the fashion group, triggering restrictions for six months under the City takeover code.
The Boohoo board said it believed its own business plan, led by its new chief executive, Dan Finley, will maximise shareholder value, while reiterating concerns about Frasers’ disruptive actions aimed at “self-interest”.
The company claimed it was “not the first time Frasers has acted in this way without having set out details of an alternative credible plan”.
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Boohoo suggested that Frasers had acted in a similar way in relation to Studio Retail Group, “where it used its shareholding of just under 30 per cent to exert significant pressure on the existingmanagement team”.
The company added: “This included attempts by Mike Ashley to be appointed as chairmanof the board and a separate shareholder requisition with the objective of installing Benjamin Gardener to the board. The business was then put into administration.
“Frasers ultimately succeeded in acquiring the business out of administration for £1 and settled the business’s remaining secured liabilities for approximately 50 per cent of their face value. Studio Retail’s other shareholders are likely to lose the entire value of their investments.”