Boohoo should get shareholder approval before disposals, says Frasers

The company said that "in light of the board's refusal to allow shareholders to vote on key decisions affecting Boohoo, such as the CEO appointment", it has been left "with no choice" but to ask the board to publicly confirm that Boohoo will not make any disposals without getting shareholder approval first.

Frasers also argued that Boohoo should get confirmation from an independent adviser/investment bank that the terms 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".

These measures are necessary "to protect the interests of Boohoo, its shareholders and its stakeholders", Frasers said.

The letter came after Boohoo announced last that week that it had appointed Dan Finley - the current boss of Debenhams - as its new chief executive.

That announcement came just days after Frasers Group, which owns a 27% stake in Boohoo, called on the online fashion retailer to replace its CEO with Mike Ashley.

In an open letter on 24 October, Frasers also called Boohoo’s recent £222m debt refinancing "wholly unsatisfactory" and said it had been agreed on unfavourable terms.

"The new £222 million facility is severely short dated, seemingly more expensive than the previous financing arrangement and almost unquestionably leaves the company in a position of needing to undertake drastic corporate actions (whether it be disposals, deeper operational cuts, closures etc.) in order to repay the term loan due in 10 months," Frasers said at the time.

"Had Boohoo engaged constructively with Frasers on the refinancing, alternative solutions could have been fully explored which may have resulted in a more favourable outcome for all stakeholders."

Boohoo hit back the next day, suggesting that the appointment of Mike Ashley as CEO could be a conflict of interest.

Boohoo also defended its debt refinancing, said that Frasers’ characterisation was "inaccurate and unfair".

"The company's approach to its recent debt refinancing was discussed on numerous occasions with Frasers and its advisers," it said.

"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."

In its latest open letter to Boohoo on Wednesday, Frasers said: "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."

It added: "We continue to believe strongly in the potential of the boohoo business and the quality of its brands.

"However, 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."