REG - boohoo group plc - Further statement on Revolution Beauty Group plc

BoohooAnnouncement

28/06/2023 07:00

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RNS Number : 2098E  boohoo group plc  28 June 2023

 FOR IMMEDIATE RELEASE  28 June 2023

 
 

boohoo group plc

("boohoo")

Further statement on Revolution Beauty Group plc

 

boohoo, the beneficial owner of approximately 26.6% of the issued share
capital of Revolution Beauty Group plc ("Revolution Beauty" or the "Company")
yesterday attended the first Annual General Meeting ("AGM") of Revolution
Beauty since its AIM IPO in July 2021.

 

boohoo wishes to record the serious concerns it has regarding the conduct of
the board of Revolution Beauty at, and immediately following, the AGM, which
it regards as self-serving and not in the best interests of shareholders as a
result of the following actions:

 

·    the unilateral attempts of the Company's board to adjourn a quorate
meeting without the approval of shareholders present, which subsequently
failed due to the resolution attracting a 74% vote against adjournment;

·    the AGM subsequently proceeding with resolutions 2, 3 and 5 all being
defeated, with approximately 74% of votes against each of these resolutions.
This resulted in the removals of Bob Holt (CEO), Elizabeth Lake (CFO) and
Derek Zissman (Chair and Senior Independent Director) from office; and

·    the conduct of the remaining independent director (Jeremy Schwartz),
who post AGM, contravened corporate governance best practice and disregarded
the expressed opinion of the Company's shareholders. This abuse of process
resulted in the unilateral appointment of two new non-executive Directors and
the re-appointment of the three former Directors who had just been removed
from office by the Company's shareholders.

 

boohoo fails to see how such a board can claim to be acting in the best
interests of shareholders, and is instead self-serving, as demonstrated by its
actions over the last 24 hours. This will likely result in significant
remuneration and share awards for members of a self-elected board at the
lifting of the suspension of trading in its shares, which boohoo was pleased
to hear is imminent.  It is notable that at no point did the remuneration
committee seek prior shareholder consultation, or approval in relation to
these awards, again contravening best practice in relation to corporate
governance.

 

boohoo remains supportive of a lifting of the suspension, but not at the
expense of doing so with a board that has proven to behave inappropriately.

 

boohoo calls on the board to convene the requisitioned General Meeting of
Revolution Beauty proposing to remove Bob Holt, Elizabeth Lake and Derek
Zissman and to appoint Alistair McGeorge and Neil Catto as directors without
further delay and not to resort to further attempts to obstruct shareholders
and adjourn that meeting, once convened.

 

boohoo remains committed to wholesale board changes at Revolution Beauty and
the appointment of a new, majority-independent board with the right balance of
skills and experience and believes that it is of paramount importance that the
future board of directors of Revolution Beauty have direct and relevant
experience of dealing with its customers.

 

Further background in relation to boohoo's serious concerns regarding the
conduct of the board at the AGM, and subsequently, is set out below.

 

 Enquiries
 boohoo group plc
 Shaun McCabe, Chief Financial Officer                 Tel: +44 (0)161 233 2050
 Alistair Davies, Investor Relations                   Tel: +44 (0)161 233 2050
 Mark Mochalski, Investor Relations                    Tel: +44 (0)20 3239 6289
 Clara Melia, Investor Relations                       Tel: +44 (0)20 3289 5520

 Zeus Capital - Nominated adviser and joint broker
 Dan Bate / James Edis                                 Tel: +44 (0)161 831 1512
 Benjamin Robertson                                    Tel: +44 (0)20 3829 5000
 Jefferies - Joint broker
 Ed Matthews / Harry Le May                            Tel: +44 (0)20 7029 8000
 Buchanan - Financial PR adviser                       boohoo@buchanan.uk.com
 Richard Oldworth / Toto Berger / Verity Parker        Tel: +44 (0)20 7466 5000

 

Background

 

On 19 June 2023, boohoo announced that it had notified the board of Revolution
Beauty of its intention to vote against the reappointment of Bob Holt, Derek
Zissman, and Elizabeth Lake at the AGM. In addition, boohoo requisitioned a
General Meeting of Revolution Beauty proposing to remove Bob Holt, Elizabeth
Lake, and Derek Zissman and to appoint Alistair McGeorge and Neil Catto as
directors, with the proposed board committing to undertake a rigorous process
to appoint additional independent directors such that the reconstituted board
would be comprised of a majority of independent directors. Further, on 22 June
2023, boohoo announced Rachel Horsefield, a former CEO of Beauty at THG plc,
would be included in the future independent board appointment process.

 

Conduct of the AGM

 

Present at yesterday's AGM were shareholders representing a majority of the
issued share capital of Revolution Beauty, including representatives of
boohoo. This was Revolution Beauty's first AGM since IPO in July 2021 and the
resolutions proposed at the meeting included resolutions to appoint Bob Holt,
Elizabeth Lake, and Derek Zissman to office given that their appointment to
the board of Revolution Beauty had yet to be voted on by shareholders and
would be required to resign from office if not appointed by shareholders in
the meeting.

 

In its RNS statement released on 21 June, the board of Revolution Beauty
stated that it would propose at the AGM that the meeting be adjourned to a new
date.  In fact, no such proposal was made at the AGM.  Instead, the chairman
Mr. Zissman started the meeting by announcing his decision to unilaterally use
his powers to adjourn the meeting without proposing that adjournment to the
meeting in order for the proposal to be voted on by shareholders in accordance
with the Company's articles of association.

 

This unilateral decision was said by the chairman to be justified by concerns
that the board has regarding the potential voting of certain shareholders
other than boohoo, and whether such voting might be in breach of private
contractual obligations between those shareholders and the Company. The
chairman declined, however, to provide further details of these concerns,
citing further concerns regarding confidentiality.  Nevertheless, the
chairman informed the meeting that in the board's view its concerns gave the
chairman the ability to dispense with a shareholder vote on the question of an
adjournment, and all other business at the meeting (including, conveniently,
his own appointment and the appointment of his fellow board members) because
it was clear to the board that the "business of the meeting could not be
properly conducted".

 

Representatives of boohoo present at the meeting rejected the chairman's
position, pointing out that any concerns of the board regarding the potential
voting of certain shareholders should not result in all other shareholders
being effectively disenfranchised on the day, particularly where all other
shareholders (boohoo included) are not parties to these private contracts.
boohoo's representatives also pointed out that the meeting, which had been
validly convened and at which a quorum was present, was patently capable of
being properly conducted irrespective of the board's concerns.

 

boohoo's representatives at the meeting further pointed out that if any
shareholder in respect of which the board had contractual concerns did not, in
fact, vote at the meeting, those concerns would in any case be removed.

 

In its RNS statement released after the AGM, the board states that "the boohoo
representatives requested that the chairman obtain undertakings to the meeting
from certain shareholders that they would not vote in breach of their
contractual obligations". That is not correct: boohoo's representatives had no
authority to make any such request and did not do so.  Rather, they explained
to the chairman that if the relevant shareholders did not in fact cast votes
in the meeting, the chairman had no proper basis on which to decide
unilaterally that the meeting should not proceed.

 

This was a position which was ultimately accepted by the chairman.  That the
meeting then proceeded without any procedural difficulties reveals, in
boohoo's view, the inappropriateness of the chairman's attempt to
disenfranchise all shareholders in attendance at the meeting irrespective of
their contractual relationships with the Company (or lack thereof). That the
meeting also proceeded to result in the chairman's removal from office, Bob
Holt's removal from office, and Elizabeth Lake's removal from office, clearly
suggests an alternative explanation for the chairman's attempt to stop the
vote, linked not to the best interest of shareholders but to the personal
interests of those directors who were then removed from office.

 

Action following the AGM

 

As it turns out, the board's apparent desire to disenfranchise shareholders
did not stop after the AGM, when it was announced that the sole remaining
director, Jeremy Schwartz, had promptly used his powers to reappoint all of
the directors removed from office at the AGM and in addition to appoint
additional directors chosen for appointment by those same directors before
their removal.

 

The effect of this is that Revolution Beauty's board of directors is entirely
comprised of directors who have appointed each other, whose appointments have
not been approved by shareholders and who (in the case of the chairman, the
CEO and the CFO) were validly removed from office at a duly convened
shareholder meeting despite the board's attempts to prevent voting at that
meeting.

 

boohoo fails to see how a board comprised entirely of directors appointed by
each other, the majority of whom (including the chairman, CEO and CFO) have
attempted to prevent shareholders from voting on their reappointment at an
AGM, can claim to be acting in the best interests of shareholders.

 

boohoo remains committed to ensuring that Revolution Beauty has a majority
independent board with the right balance of skills and experience and believes
that it is of paramount importance that the future board of directors of
Revolution Beauty have direct and relevant experience of dealing with its
customers. In light of the events of the last 24 hours boohoo also considers
the current board of Revolution Beauty to lack not only this balance of skills
and experience but also the ability to prioritise the interests of
shareholders over their own self-interest.

 

boohoo calls on the board to convene the requisitioned meeting without further
delay and not to resort to further attempts to adjourn that meeting, once
convened.

 

-ends-

 

About boohoo group plc

"Leading the fashion eCommerce market"

Founded in Manchester in 2006, boohoo is an inclusive and innovative global
brand targeting young, value-orientated customers, pushing boundaries to bring
its customers up-to-date and inspirational fashion, 24/7.

In 2017, the group extended its customer offering through the acquisitions of
the vibrant fashion brand PrettyLittleThing and free-thinking brand Nasty Gal.
In March 2019, the group acquired the MissPap brand, in August 2019 the Karen
Millen and Coast brands and in June 2020 the Warehouse and Oasis brands, all
complementary to the group's scalable, multi-brand platform. In January 2021,
the group acquired the intellectual property assets of Debenhams, with the
goal of transforming a leading UK fashion and beauty retailer into a digital
department store and marketplace through a new capital-light and low-risk
operating model. In February 2021, the group acquired the intellectual
property assets of UK brands Dorothy Perkins, Wallis and Burton. As at 28
February 2023, the boohoo group had 18 million active customers across all its
brands around the world.

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