4 Jul 2018 13:20
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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
For immediate release
4 July 2018
Koovs plc
Update on Capital Raising
Future Lifestyle Fashions Limited, India's largest integrated branded fashion company, to subscribe for up to 29.9% of Koovs
Transformational deal for Koovs
Koovs plc ("Koovs", or the "Company") AIM: KOOV, the leading e-commerce fashion business, is delighted to announce that it has reached a conditional agreement with Future Lifestyle Fashions Limited ("FLFL"), part of Future Group - India's largest retail group, for FLFL to subscribe for up to a 29.9 per cent stake in Koovs.
Future Group is among India's leading consumer goods companies with brands and retail networks in the fashion, food and homeware segments. It owns over 60 brands, operates close to 2,000 retail stores spanning over 22 million square feet and attracts footfalls of over 500 million annually. Future Group also has one of India's most unique digital payment platforms, Future Pay, which has an active user base of over 6.5 million and is growing rapidly. Future Group sells some 30 crores of garments in volume making it one of the top 10 fashion apparel companies in the world.
FLFL owns and markets some 30 fashion brands through exclusive brand outlets, department stores and multi brand outlets, as well as company-operated chains such as Central and Brand Factory. FLFL collectively operates more than 400 stores encompassing over 6 million square feet of retail space and is a unique player in the Indian fashion industry due to its integrated "design to distribution" model and presence across all key segments within the fashion industry. With support from a large retail channel, FLFL also leverages its strong portfolio of own brands that contribute to approximately 40% of total sales, thereby creating a distinctive, integrated fashion play. Led by Lee Cooper, its top six 'power brands' contribute approximately 60% of FLFL's revenue from own brands. FLFL has also successfully invested in fashion brands like BIBA and AND in the past and currently holds investment in other brands like Clarks, Cover Story and Celio.
Lord Alli, Chairman of Koovs, said: "This marks a giant step forward in the Koovs' journey to win the e-fashion market in India. FLFL with its leadership position as an integrated branded fashion player and the Koovs brand and technology platform are an unbeatable combination. This investment will bring enormous benefits to our customers and partners as well as significant value for all shareholders."
Kishore Biyani, Future Group Managing Director and Group CEO, said: "In FLFL we have successfully created, grown and invested in leading Indian fashion brands and are excited to partner with Koovs to continue building on FLFL's ambition. This investment would complement the existing value chain for FLFL as an integrated branded fashion player. FLFL's strong retail presence backed by owned brands coupled with Koovs online strategy will help reach more customers and create value for all stakeholders."
Subject to the satisfaction of certain conditions, under existing shareholder authority, Koovs will issue FLFL with 57,876,600 new ordinary shares at a price of 10p per share, representing 24.8 per cent of the enlarged issued share capital (the "Subscription") raising £5,787,660 of cash (the "Subscription Sum").
The Subscription is conditional upon, inter alia, admission of the Subscription Shares to trading on the AIM market of the London Stock Exchange plc ("AIM") becoming effective on or before 8.00 a.m. London time on 19 July 2018 or such later time or date as may be agreed between the Company and FLFL ("Admission"). Application for Admission will be made following receipt of the Subscription Sum. The Company will release a further announcement in due course. The Subscription is not conditional upon completion of the Equity Raise (as defined below).
It is intended that up to two representatives of FLFL will join the Board of Koovs in due course.
In addition, Koovs today also announces the formal opening of a bookbuild to raise up to £10m of equity at a price of 15p per share (the "Equity Raise"). The Equity Raise is conditional upon, inter alia, shareholder approval. Lord Alli has committed to invest £1.5m in the Equity Raise and FLFL has conditionally agreed to make additional investments to take its ownership up to 29.9 per cent. within six months of completion of the Equity Raise. Further details regarding the additional FLFL investments and the Equity Raise are set out in the Appendix below. It is intended that the Equity Raise will remain open for orders to be submitted until 3pm on 12 July 2018 and an announcement on the result of the Equity Raise will be made shortly thereafter.
Further to the Company's announcement on 18 June 2018, alongside the Equity Raise the first tranche of £4.2m of new ordinary shares to HT Media will be allotted.
This announcement contains inside information under Article 17 of Regulation (EU) 596/2014.
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Appendix
FLFL additional investments and Equity Raise
On 18 June 2018 Koovs announced that positive discussions were underway with existing and potential new shareholders regarding an equity raise.
A target raise of £10m at a price of 15 pence per share has been set for the Equity Raise. FLFL has conditionally agreed, within six months of the date of completion of the Equity Raise, to make such additional investments (in addition to the 57.8 million shares subscribed under the Subscription), as will take its ownership interest up to 29.9 per cent. The size of the additional FLFL investment is dependent on the final size of the Equity Raise and will be conditional upon, inter alia, shareholder approval and admission of any ordinary shares issued to FLFL to trading on AIM.
Lord Alli has committed to acquire £1.5m of new ordinary shares under the Equity Raise.
Lord Alli's and FLFL's participation in the Equity Raise will, at the point they are entered into, be Related Party Transactions under the AIM Rules for Companies by reason of their substantial shareholdings in Koovs. Further details will be set out in the shareholder circular.
It is intended that the Equity Raise will remain open for orders to be submitted until 3pm on 12 July 2018 and an announcement on the result of the Equity Raise will be made shortly thereafter. Koovs may at its sole discretion alter this timetable and the terms of the Equity Raise. Whitman Howard will act as bookrunners to the Equity Raise. The full terms and conditions of the Equity Raise will be announced in due course.
The Equity Raise is subject to shareholder approval and a circular convening a General Meeting of Koovs will be despatched to shareholders shortly after the closing of the books on the Equity Raise.
Participation in the Equity Raise is being offered to a limited number of specifically invited persons only and will not be offered in such a way as to require any prospectus or other offering document to be published. No prospectus or other offering document has been or will be submitted to be approved by the United Kingdom Listing Authority in relation to the Equity Raise. Participants' commitments will be made solely on the basis of the information contained in the announcement of the terms and conditions of the Equity Raise and any information publicly announced through a Regulatory Information Service (as defined in the AIM Rules for Companies) by or on behalf of the Company on or prior to the date of such announcement and subject to any further terms set forth in the trade confirmation to be sent to individual participants.