No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Debenhams Group, the online retail platform formerly known as and still trading on AIM as Boohoo Group, said on Thursday that it has completed an oversubscribed and upsized equity raise, securing 40m in gross proceeds to support its turnaround strategy.
The company said demand for the placing and subscription significantly exceeded the 35m initially targeted, prompting it to increase the size of the fundraise.
It said the shares were issued at 18p each, representing a 5% discount to the closing price of 19p on 17 February.
In total, the group placed 200 million new ordinary shares and issued a further 22,222,222 shares under subscription, generating gross proceeds of 40m and net proceeds of around 38.7m after expenses.
Admission of the new shares to trading on AIM was expected at 0800 GMT on 23 February, at which point they would rank pari passu with the existing ordinary shares, including dividend rights.
Admission remained conditional, among other things, on the placing agreement becoming unconditional and not being terminated.
As part of the transaction, several directors participated in the fundraise.
Group chief executive Dan Finley subscribed for 833,333 shares, investing 0.15m, while founder Mahmud Kamani, together with his close relatives and related trusts, subscribed for 44,444,444 shares for 8m.
Iain McDonald subscribed for 16,666,666 shares for 3.0m.
The total director participation was 61,944,443 new shares and constituted related party transactions under the AIM rules.
Frasers Group, which holds more than 10% of Debenhams Group's existing share capital and was also a related party under the AIM rules, agreed to subscribe for 59,682,052 new shares under the placing.
Alongside the fundraise, the company announced that Iain McDonald would step down with immediate effect as non-executive director and chair of the remuneration committee following his participation in the placing.
The company said the move would facilitate participation in the fundraise by certain funds managed by McDonald.
Debenhams said its board was satisfied that it remained appropriately sized and independent, noting the appointment of Tom Handley last year and Tim Morris's transition to independent chair in 2024.
"It has been a pleasure to be a non-executive director at Debenhams over the last nine years and I am delighted to support the company in the fundraising," McDonald said.
"This should be viewed as a measure of how much I believe the current market valuation of the business undervalues its future prospects.
"Dan has transformed the cost base and business model since being installed as CEO and with the re-basing of the business to a profitable core now largely complete, the prospects for strong growth and cash generation are the best for many years.
"I have confidence in the board and wider management team on delivering its turnaround."
Finley added that the company was "pleased" with the strong level of support from new and existing shareholders.
"The success of the fundraise demonstrates the strength of support for our multi-year turnaround strategy," he said.
"The fundraise will deliver an improved capital structure for the group, providing us with greater financial flexibility to execute our turnaround strategy and deliver value for all shareholders."
At 0921 GMT, shares in Boohoo Group were up 7.03% at 19.27p.
Reporting by Josh White for Sharecast.com.