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(Alliance News) - Online clothing seller boohoo Group has bought the remaining stake in PrettyLittleThing from the co-founder's son, announcing the move on Thursday, a day after defending itself over the issue against a short seller.
boohoo said it is buying the remaining 34% stake in PrettyLittleThing from minority shareholders Umar Kamani and Paul Papworth for an initial consideration of GBP269.8 million, potentially rising to GBP323.8 million.
"By acquiring the remaining 34% stake in PLT today, the group is taking an important further step towards achieving its vision to lead the fashion e-commerce market globally by accelerating full ownership of a brand that is in high growth with enormous growth potential ahead of it, in a transaction that creates significant value for the group's shareholders," said boohoo.
boohoo bought a 66% stake in PrettyLittleThing for GBP3.3 million in 2016 and had the option to buy the remaining stake in 2022.
The initial consideration will be settled in a combination of shares and cash, worth GBP107.9 million and GBP161.9 million respectively. The cash element will be funded from the GBP240.7 million net cash the group had on its balance sheet at the end of February.
boohoo's purchase comes a just a day after it "strongly" refuted allegations made by short seller ShadowFall.
ShadowFall claimed boohoo has provided "a misleading impression" of its free cash flow.
"We see a risk that BOO doesn't use its recent cash call for mergers & acquisitions, but instead combines it with its considerable GBP241 million net cash, to be paid to BOO's chair's son, through material dividends and a potential PrettyLittleThing [non-controlling interest] buy-out," the short seller also alleged.
The chief executive and founder of PrettyLittleThing is Umar Kamani, son of boohoo Chair & Co-Founder Mahmud Kamani.
boohoo shares were up 11% in early trade Thursday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.7% at 6,189.43
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Hang Seng: down 0.9% at 23,102.70
Nikkei 225: closed up 2.3% at 21,916.31
DJIA: closed up 553.16 points, 2.2%, at 25,548.27
S&P 500: closed up 1.5% at 3,036.13
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GBP: up at USD1.2268 (USD1.2217)
EUR: up at USD1.1019 (USD1.0977)
Gold: up at USD1,719.14 per ounce (USD1,701.04)
Oil (Brent): soft at USD34.14 a barrel (USD34.43)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
1100 BST Ireland retail sales index
1100 CEST EU business & consumer surveys
1400 CEST Germany provisional consumer price index
0830 EDT US advance report on durable goods
0830 EDT US 2nd estimate gross domestic product
0830 EDT US unemployment insurance weekly claims report
1000 EDT US pending home sales index
1030 EDT US EIA weekly natural gas storage report
1100 EDT US Federal Reserve Bank of Kansas City survey of manufacturing
1100 EDT US EIA weekly petroleum status report
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The US coronavirus death toll passed 100,000 as the pandemic tightened its grip on South America, which is outpacing Europe and the US in daily infections, AFP reports. Global cases have surged to nearly 5.7 million, with more than 354,000 deaths, and the worrying acceleration of the disease in South America has marked the continent as the new hotspot. Deaths in Brazil topped 25,000 on Wednesday, and its caseload is second only to the US, where authorities have moved to ease lockdowns and help the battered economy, despite experts recommending they remain on guard for a resurgence of the disease. Nearly 1.7 million Americans are known to have been infected with the disease, according to a Johns Hopkins University tally.
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China's parliament is expected to adopt a controversial national security law for Hong Kong on Thursday, in a move that has spurred protests in the financial hub and criticism by the US, dpa reports. The law would bypass Hong Kong's internal legislature to punish acts related to endangering national security and subverting state power in the semi-autonomous Chinese territory. Beijing would also be able to set up outposts of mainland agencies in Hong Kong to curb violent protests and interference by foreign countries, according to an overview of the law published Friday by Xinhua news agency. China's parliament, the National People's Congress, is set to vote on the law Thursday afternoon, at the closing of the annual parliamentary session. It is almost certain that the law will pass, as the NPC is a largely ceremonial political body, which has never rejected a proposal put before it. Policy decisions are made by the higher echelons of the ruling Communist Party, chiefly by the Politburo group of top leaders.
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People who come into close contact with a coronavirus sufferer will be told to self-isolate for 14 days as the UK government launches its tracing system amid mounting Tory anger over Dominic Cummings' alleged lockdown breaches, PA reports. NHS Test & Trace – seen as key to easing the restrictions – will be rolled out across England on Thursday with the help of 25,000 contact tracers, while an accompanying app is still delayed by several weeks. It comes amid a growing revolt within the Conservative Party over the prime minister's chief adviser's controversial trip to Durham – with dozens of backbench Tories criticising his actions, and at least 38 calling for him to quit or be sacked. And senior minister Penny Mordaunt admitted there were "inconsistencies" in Cummings' account – saying "there is no doubt he took risks". Boris Johnson continued to stand by his aide and insisted it was time to "move on" when he faced intense questioning over the issue in an appearance before the Commons Liaison Committee of senior MPs on Wednesday.
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The governor of the Bank of England has warned Britain's economic recovery from the coronavirus crisis will be tougher than expected, saying a fresh wave of money creation methods will be needed. Andrew Bailey has shied away from idea of cutting official interest rates to below zero for the first time in the bank's 326-year history. Instead, he says more economic support is likely to come in the form of quantitative easing – in which the bank buys government bonds from investors, pumping money into the economy in the process. Since the crisis began in March, the bank has cut official interest rates to 0.1%, announced a GBP200 billion expansion of QE, made moves to ease the financial pressure on large companies and made it easier for banks to lend. Bailey is wary, however, of going further by taking interest rates negative. "We have signalled that we stand ready to do more within the framework of policies we have used to date," he wrote in The Guardian.
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BROKER RATING CHANGES
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CREDIT SUISSE RAISES HAYS TO 'NEUTRAL' ('UNDERPERFORM') - TARGET 120 (105) PENCE
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JEFFERIES INITIATES GREGGS WITH 'BUY' - TARGET 2375 PENCE
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JEFFERIES INITIATES GAMES WORKSHOP GROUP WITH 'BUY' - TARGET 8500 PENCE
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COMPANIES - FTSE 100
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easyJet set out plans to reduce the business as it warned pre-Covid demand is not expected to be reached again until 2023. The low-cost airline confirmed it will take to the skies again on June 15 on a "small" number of routes where there is sufficient demand to support profitable flying. This will mainly comprise domestic travel in the UK and France. Further routes will be announced as demand increases and government restrictions across Europe are relaxed, easyJet said. So far, booking trends on the resumed flights have been encouraging, and the demand indications for summer 2020 are improving, albeit from a low base. Bookings for winter are well ahead of the equivalent point last year, including customers who are rebooking coronavirus-disrupted flights for later dates. In the company's financial fourth quarter to the end of September, easyJet expects to fly around 30% of the planned capacity flown in the fourth quarter a year ago. Alongside this, easyJet is planning to reduce staff numbers by up to 30%. It will shortly launch an employee consultation process.
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Standard Chartered Bank will redeem outstanding GBP675 million worth of notes on July 14, parent Standard Chartered PLC said late Wednesday. The bank intends to redeem GBP675 million worth of 5.375% step up undated subordinated notes at 100% of their principal amount together with accrued interest. Following redemption, the notes will be cancelled.
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COMPANIES - FTSE 250
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Cineworld said it plans to reopen its cinemas in July. The cinema chain said its lenders have agreed to waive the leverage covenant for its credit facility's June test, and has increased the covenant to 9.0 times net debt to Ebitda for the December test. The group has agreed the terms of USD110 million of additional liquidity through an increase in its revolving credit facility. It also has secured credit committee approval to apply for an additional USD45 million through the Coronavirus Large Business Interruption Loan Scheme in the UK and expects shortly to commence a process to access USD25 million through the US government CARES Act. Cineworld expects cinema restrictions will be lifted in each of its territories by July, and it plans to reopen all its cinemas that month.
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FirstGroup welcomed the UK Department for Transport's funding programme. The transport firm noted that regional bus operators in England have initially been allocated GBP254 million in additional funding by DfT, which will allow FirstGroup to increase bus service capacity as travel restrictions begin to ease. It added that at May 26, undrawn committed headroom and free cash was stable at GBP770 million. For the first month of the current financial year, cash generated by operations in its Road divisions and for the group as a whole was positive and ahead of expectations at the start of the month.
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Fellow transport operator Stagecoach also noted the UK government's bus programme, as it warned that Covid-19 is set to leave a lasting effect on travel patterns. Commercial sales at local regional bus operating companies are now at around 17% of prior year levels, it said. Plans are in place to increase regional bus vehicle mileage close to pre-Covid levels in the near future. These are currently running at 40% of pre-virus levels. Meanwhile, available liquidity has increased "significantly" due to positive cashflow and new borrowing capacity. "We see a lasting effect of the Covid-19 pandemic on travel patterns with an acceleration in trends of increased working from home, shopping from home, telemedicine and home education. We anticipate that it will be some time before demand for our public transport services returns to pre-Covid levels and we are planning for a number of scenarios," said Chief Executive Martin Griffiths.
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Thursday's Shareholder Meetings
IDOX
Crossword Cybersecurity
Seplat Petroleum
Strix Group
Civitas Social Housing (re investment policy change)
Ferrexpo
Bodycote
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
