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PART TWO

Then, in May this year, Ashley and Frasers’ executives were incensed when Boohoo revealed a plan to pay three bosses — Kamani and his co-founder, Carol Kane, as well as chief executive John Lyttle — £1 million each in bonuses despite the company’s losses widening. A showdown was inevitable. Ashley invited Kamani to meet.

They agreed to sit down in Ashley’s slick, modernist offices above Frasers’ Flannels flagship store on London’s Oxford Street, according to one person briefed on the tête-à-tête .

While the meeting between the two imposing tycoons started cordially, it became heated when the conversation turned to Boohoo’s bonuses, with both men refusing to give ground. About 48 hours later, however, on a drizzly May 28, Boohoo withdrew its bonus proposals.

But that climbdown — humiliating as it looked for Kamani — was not enough to satisfy the Ashley camp. Tightening the screw, they moved from offering Ashley’s services as an unpaid adviser to pushing for a board position.

Boohoo said it had always been made clear by Frasers that this candidate would not be Ashley. With such an assurance, about two weeks ago, Boohoo is understood to have indicated to Frasers that it might be willing to accept.

At the same time, it was becoming clear that the fast-fashion firm needed to raise more money. Ashley’s camp had privately suggested, several times, a deal structure whereby Frasers could underwrite a rights issue, although Boohoo felt no concrete proposal was forthcoming.

Then, on Friday, October 18, Boohoo dropped a bombshell. It announced a strategic review, the departure of chief executive Lyttle, and a new £222 million debt refinancing deal.

PART ONE

Mike Ashley has come a long way from Maidenhead, the Berkshire town where he opened his first sports shop using a £10,000 family loan. These days, the self-made billionaire, 60, devotes much of his time to jetting between his luxury homes in Miami and Majorca.

Soon, though, he might be spending his days toiling away in the drizzly centre of Manchester — if he succeeds in inserting himself as the new chief executive of Boohoo, the embattled online retailer. And while many incredulous industry peers doubt Ashley’s appetite for the job, he feels he is up for the fight.

Commenting publicly for the first time in years, he emailed The Sunday Times to declare: “I am all in.”

He said: “I’m ready to dedicate my time and effort — including basing myself in Manchester as much as I deem required — to turn boohoo around and deliver value for all shareholders.”

Last week, Ashley, London’s premier supplier of stock market marmalade droppers, shocked the retail world with his new job application. It was the culmination of a months-long battle that included a tense showdown in Ashley’s London office with Boohoo’s executive chairman, Mahmud Kamani, 60.

The pair, both big characters, have history. In 2021, Boohoo spent £55 million acquiring Debenhams, an asset long sought-after by Ashley. In 2022, his Frasers Group beat Boohoo in the bidding for Missguided, a troubled fast-fashion firm that had collapsed into administration.

Frasers, now led by Ashley’s son-in-law Michael Murray, 35, started buying up shares in Boohoo in June last year. Today, its shareholding stands at 27 per cent, which should give the Sports Direct owner a voice at the boardroom table. The value of the stake has tumbled along with Boohoo’s share price amid competition from the likes of Chinese retailer Shein.

Behind the scenes, Murray has been trying to persuade Boohoo to offer its customers Frasers Plus — his company’s Klarna-style buy-now, pay-later service — as a payment option. Ashley, meanwhile, had been offering advice to Boohoo on how it should deal with a £325 million refinancing; one option he posited was that he could underwrite a rights issue.

It is also understood that Ashley floated the idea with Kamani that he could become an unpaid adviser to Boohoo. He has the same role at Hornby, the model train maker in which Frasers holds a 9 per cent stake. “It is all part of his playbook,” said one person with experience of dealing with Ashley.

Thanks. Not much there that we didn't know already really.

Got that, just don't have access to a paywalled article.

Razorsedge - can you post the article?

If anyone likes the idea of Umar Kamani as CEO please remember he is the guy who reportedly paid Molly-May Hague £400,000 a month to be the Creative Director of Pretty Little Thing. She was 22 years old.

That fact alone makes him unsuitable for that role. Thank god that Mike Ashley is now in opposition.

That would be the best refresh that I can think of.

The board have pretty much indicated that asset sales will be taking place, and this is likely to be before the first debt tranche has to be paid. That means advisors will be shopping the assets to interested parties, and that is not likely to be done privately, even though they will try to. Leaks linking this that and the other to Boohoo brands or the company itself will start to circulate ... and that's when you'll see SP action.

The crunch point for these companies is when the USA and Europe close the deminimis tax loophole. If Shein IPO they will be subjected to intense scrutiny and hedge funds will short them to oblivion.

The key for any online player is to survive long enough until the competitive landscape starts to even up.

Reardon ... there is a long way to go, the battle for control is only getting started. The plus is that Ashley is a match for Kamani.

John Lyttle CEO and the former CFO took their positions motivated by making a small fortune off the back of free shares, a very generous incentive scheme. After the shorting blitz following a slide in performance the incentive scheme was ratcheted down to much lower targets. After even worse results the Board again tried to engineer another incentive scheme ... at the expense of shareholders. If it wasn't for Mike Ashley that would have gone through, so credit to him for stopping it.

Then Lyttle quits, and my guess is that the plan was to take the company private, and at a price that would make his incentives worthless. So no point in staying on. He never used a penny of his salary or bonus to buy even one share. That is extremely rare for anyone in the CEO chair. He talks about how much he believes in the potential of the company ... but his actions did not reflect that belief.

My patience has run out with these shysters, time for a change in management.

Sorry, they have 21 days to respond to the request and normal practice is to give 21 days notice of the EGM.

So it should come to a head soon.

I think the Board have up to 21 days to formally respond and any EGM has to take place by day 28.

Hexam - I think most people would agree with you. Once you’ve been caught out you’d not try it on again?

Then Umar appears back on the scene, John Lyttle resigns, and now assets sales are on the table. I’m not as confident as you are on this issue. I’m not 100% on Ashley either. Perhaps in a strange way the presence of both will keep things honest.

BFD - not to go through that post piece by piece. But the common denominator is that all of these parties are being paid by Boohoo. So how truly independent can they be??

Getting Ashley on the Board, or at least a representative will help ensure that transactions are done in good faith.

Well we both have the same objective. But I think that the assets are now up for sale and that needs careful monitoring.

When the Board put forward that latest incentive package it was clear that they could not be trusted. If they are selling to independent outside parties they will seek a competitive price, but I’m less confident they will if buying themselves.

My point is that these things can and do happen, and I don’t have confidence that the checks and balances always work.

Just look at how the PLT purchase was managed?

Exactly, Shadowfall claimed they overstated its profitability and used Boohoo cash pile to purchase it at a price that was too high. How independent can someone be that you are paying?

A lot of China based IPOs in the US pulled this trick. Raising money on the market and buying assets of connected people at inflated prices. A way of salting off cash from shareholders.

Well you might not try very hard to market for competitive bids, for one. And you could set up some “independents” to rubber stamp that a competitive bid process was properly undertaken.

Like you, I have no issue with unlocking value, as long as a competitive price is paid. But if the Kamani’s are the buyers, how much faith do you have that that happened?

I’m not sure that a Board need to get shareholder votes? Did shareholders vote when PLT was purchased? The other concern is whether they open up for competitive bids? I’m not a corporate lawyer so I’m not clear on these matters, however, it was suggested in the Times that Ashley was prompted by concerns that the Kamani’s wanted to take brands into their own private ownership.