Boohoo completes £39.3m fundraising amid Frasers boardroom showdown

Boohoo Group, which owns Boohoo, PLT and Karen Millen, has raised £39.3 million in a "significantly oversubscribed" placement to reduce debt after reporting widening losses. Meanwhile, it is urging shareholders to block Mike Ashley's bid for a seat on its board.

The group announced the fundraiser alongside its H1 results. Revenue was down by 15% to £619.8 million and its adjusted pre-tax loss widened to £27.4 million, compared to £9.1 million a year prior. Operating profit was down by 19.2% to 314 million and net debt grew by 108.1% to £143.1 million.

Despite the dire losses, Boohoo's new boss Dan Finley said in results on Wednesday that the group "has seen positives" in its first half, pointing to growth in beauty, Debenhams Marketplace and its Karen Millen brand.

The group blamed steep competition from fast fashion rivals Shein and Temu for its widening losses, turning to new CEO Dan Finley to lead its strategic review and boost value across its five core brands. Finley, the former CEO of Debenhams, was appointed earlier this month in an apparent snub to retail tycoon Mike Ashley.

"We are pleased with the level of support from our existing shareholders for the business in its next stage of growth," said Finley.

"I believe that the Group remains fundamentally undervalued. We have a significant opportunity to create substantial value for all shareholders through our 5 core brands," he added.

In the same breath as launching its interim results as well as its now completed fundraiser, Boohoo issued a statement urging investors to reject Mike Ashley’s bid for a board seat at a shareholder meeting next month.

In recent months, a battle has brewed between Frasers and Boohoo. Frasers, which owns a 27% stake in the retailer,  has accused it of "long-term mismanagement" causing "value destruction". Boohoo responded by saying Frasers’ criticisms were "inaccurate and unfair".

Since Ashley's plea to become CEO was dismissed, Frasers is campaigning for board influence at Boohoo. It has even set up a website "Boohoo deserves better" as it steps up its bid for a boardroom coup.

Frasers Group is requesting a board seat to protect shareholder value, expressing concerns that Boohoo's Co-founder Mahmud Kamani may reacquire the company’s assets at a discount.

The Board has responded stating that it is "concerned that Frasers is using its significant shareholdings in UK retailers, including Boohoo, to further its own self-interest at the expense of other shareholders."

Boohoo says it has a "credible plan to unlock and maximise value for the benefit of all Shareholders" under Finley’s guidance and warned of the risks posed by rival Frasers’ influence.