Boohoo has called on its shareholders to resist Mike Ashley’s attempts to gain a seat on the board, responding to what it deems his “inaccurate and unjust” criticism of the fast-fashion brand.

On Thursday, Ashley’s Frasers Group convened an extraordinary general meeting with the objective of appointing him as a director and chief executive of Boohoo, which has faced significant challenges due to competition from ultra-fast fashion brands like Shein.

Frasers Group, the parent of Sports Direct and House of Fraser, holds 27 percent of Boohoo’s voting rights. They assert that Boohoo’s current board has “lost its ability to manage the company effectively” and has accused directors of “stonewalling” their efforts.

This statement followed Boohoo’s recent announcement regarding CEO John Lyttle’s impending departure, alongside plans for a review that may result in restructuring its brand portfolio.

As the situation intensified on Friday, Boohoo firmly dismissed the claims made by Frasers, strongly recommending that shareholders vote against Frasers’ proposals, labeling the actions as a rapid coup attempt with a mere 48-hour response window.

Boohoo, which owns brands such as PrettyLittleThing and Debenhams, raised concerns about the governance implications of Ashley joining the board, especially considering his investments in competing ventures.

“Shareholders should note that Mr. Ashley holds a 73 percent stake in Frasers; additionally, Frasers owns a 23.6 percent share of Asos, competing in similar markets to Boohoo,” the company pointed out, emphasizing the necessity for careful deliberation on these matters.

The company expressed willingness to discuss board representation with Frasers constructively but stated that adequate governance measures must be established to safeguard Boohoo’s commercial interests and those of other shareholders before any appointments take place.

Boohoo highlighted that while it sought assurances from Frasers regarding these issues, none had been provided thus far.

The decision to appoint a new CEO to replace Lyttle, Boohoo noted, is a vital board matter requiring meticulous consideration and governance.

Ashley’s effort to secure a board seat appears contingent upon the voting behavior of William Barker from Camelot Capital Partners, who holds 5.6 percent of Boohoo and is also a member of the Asos board, alongside Schroders, which owns 7.1 percent.

Shareholders are reportedly divided regarding their voting decisions. Frasers advocates for a merger between Boohoo and Asos to enhance shareholder value, a proposition that Camelot and Asos reportedly oppose. There are also concerns that co-founder Mahmud Kamani could attempt to reacquire certain Boohoo brands at reduced prices in the aftermath of any potential breakup.

Frasers has shown interest in divesting Boohoo’s property assets and potentially separating Karen Millen and Debenhams, the latter of which Ashley once invested £150 million in before losing its acquisition bid to Kamani.

Last week, Boohoo revealed a £222 million debt refinancing plan, alongside a disappointing half-year trading report that led analysts to revise their forecasts downward.

In its response to Frasers’ claims about its debt refinancing, Boohoo stated that Frasers’ portrayal was “inaccurate and unfair,” following accusations from Frasers of the company taking a “step backward.”

Boohoo asserted, “The refinancing ensures the company’s future financial needs and is supported by its existing financial institutions.”

Boohoo indicated that discussions regarding refinancing options had occurred with Frasers, who were invited to propose alternatives, but none were received.

Existing tensions between Ashley and Kamani, long-time rivals who have both developed substantial retail empires, continue to escalate.

Recent reports suggest a disagreement between the two regarding Boohoo’s executive bonus payouts, which were proposed despite a reported loss of £160 million that was later retracted following shareholder discontent.

Analysts at Shore Capital recognized the pressing need for Boohoo to address its declining trading performance and support the sustainability of its business model amid stiff industry competition, though the specific actions required remain unclear. They plan to closely observe future developments.

Ashley is also seeking an influential position on the board of Mulberry to impact the future of the struggling British luxury brand.

The Potential Game Changers

Mike Ashley’s pursuit of the CEO position at Boohoo will largely depend on the decisions made by two pivotal investors: Camelot Capital Partners and Schroders.

They hold stakes of 5.6 percent and 7.1 percent respectively in Boohoo, positioning them as influential players in Ashley’s struggle for boardroom influence.

William Barker, the 35-year-old founder and CEO of Camelot Capital Partners, manages a Cayman Islands investment vehicle known as the Barker Partnership and has established a strong reputation for strategic investments in the retail space, recently increasing his stake in Asos to around 15 percent.

Barker typically invests significantly in companies or launches new ones, playing an active role in management. His company has notably grown Tapi into the UK’s leading carpet retailer.

Camelot’s largest investment is in Re:Build, a US engineering firm co-founded by former Amazon executive Jeff Wilke. They also have a substantial investment in AO World, an electrical goods retailer.

Camelot Capital’s involvement with Asos presents a potential conflict for Ashley as Frasers Group advocates for a merger between Boohoo and Asos, an idea opposed by both Camelot and Asos.

Camelot is reported to align with investor demands for Boohoo’s business segmentation, seeing more value in divesting brands like Karen Millen and Debenhams.

Schroders, a prominent UK asset manager that prioritizes long-term sustainable investments, also holds a crucial role in Boohoo’s future, with a stake of just over 3 percent in Asos as a factor in their decision-making process.

Both Camelot Capital Partners and Schroders were reached out to for comments.