When Scotland's oldest department store collapsed in late 2020, Anders Holch Povlsen and Mike Ashley pointed the finger at each other.
Jenners has been a regular at Princes Street in Edinburgh since 1838. For many Scots, a visit to the sumptuous Christmas tree and popular toy department was a rite of passage.
But retailers with a rich history — the company received a royal warrant from 1911 and was named «Harrods of Scotland» — were not enough to protect the business from brutal pressure on trade when Covid broke out.
Frazier has operated the department store since 2005. Ashley's deputies accused Holch Povlsen, who bought the property on Princes Street in 2017 for £53m, of not being willing to «mutually work towards a fair deal».
Holch Povlsen's team insisted that rental discounts be presented, but were rejected. More than 200 people have lost their jobs.
Two and a half years later, when the Danish billionaire converted 47 Princes Street into a luxury hotel, another dispute is brewing between the two billionaires. This time around, a company with much less history: Britain's biggest online fashion retailer.
Asos has emerged as one of the biggest winners of the pandemic. In the decade leading up to Covid, investors experienced a rollercoaster ride, with the company's stock soaring after the initial lockdown shock.
While regular retailers roamed the deserted main streets, Asos shares hit £57 each in the spring of 2021. Since then, the story has turned into a race to the bottom. Asos shares are now worth just over £3 as bosses grapple with supply chain issues and shrinking disposable income amid soaring prices.
Holch Povlsen, who has a net worth of nearly £6bn and, among other things, is the largest private landowner in the UK, but believes in business.
Retail magnate Anders Holch Povlsen remains a firm supporter of Asos despite declining margins. Photo: TARIQ MIKKEL KHAN/AFP
Bestseller, the Dane's retail empire, is Asos' biggest investor, owning 26 percent of the company. Frasers, the group controlled by Ashley, is number three on the shareholder register with a 7% stake after he started building his stakes last fall.
Between them is Camelot Capital Partners, a California-based hedge fund run by 33 people. -year-old Briton Will Barker.
His 11 percent stake is in a portfolio that includes the top 10 shares of rival Boohoo as well as electronics retailer AO World. He wants to emulate Warren Buffett, he said in an interview ten years ago.
As profit figures dwindled, refinancing the £350m loan was a top priority for the Asos board this spring, led by chairman Jorgen Lindemann and chief executive José Calamonte.
Asos banks, including Sources say that HSBC and Lloyds were nervous about the outlook for the retail sector and it would be difficult to convince them to refinance the loan.
Nevertheless, the Asos board convinced its lenders to extend the loan repayment period in July 2024 until November 2024. This was partly done to convince the company's auditors that the company was working.
But Lindemann and Jose Calamonte knew about it. was a security measure. The board concluded that the solution was to select an «alternative» lender to provide specialized financing when terms could not be negotiated with traditional corporate banks.
One such financial house was Bantry Bay. He stepped in to save Superdry and Matalan last year and was selected by the board to refinance the loan. But there was a hitch in early May, City sources say.
Bantry Bay's sole backer, prominent Wall Street hedge fund Elliott, was unwilling to sign the entire £350m. Asos' board was told only £275m would be available, according to those familiar with the talks.
Bantry Bay declined to comment, although its representatives had previously insisted that Elliot had no influence on investment decisions of the fund.< /p>
In any case, the Asos board remained in an envious position. The company was short of 75 million pounds.
As you know, Fraser did not know about the negotiations with Bantry Bay. But the FTSE 100 was only too aware of the difficult trading conditions and danger that Asos's board faced with its £350m debt.
Michael Murray, Frasers chief executive and Ashley's son-in-law, told Asos executives he had a solution and hurriedly called a conference call with them on May 23.
In exchange for more 5% stake in Asos. The Frasers would immediately invest at the company's prevailing share price. As part of this, a closer collaboration was proposed, drawing on Frasers' expertise in retail.
Described as a «win-win» for both parties, the move will reassure other shareholders, employees, customers, credit insurers and suppliers. However, the Asos board was told that this was not a takeover attempt.
However, the Asos board did not think so.
As the stock markets closed on the evening of 25 May, the company announced a £75m share offering with an option to raise an additional £5m from retail investors. Holch Povlsen and Barker, as related parties, participated in the deal and signed in full.
At first glance, the announcement looked like a reasonable decision.
Asos will not be subject to a number of restrictive banking agreements — rules, violation leading to the default of the company. Management has stated that the only exception to this rule is to maintain a minimum level of cash reserves.
But you will have to pay for this. The £275m loan comes at an interest rate of 11 per cent, and advisory fees and interest will cost the company £45m in the second half of the year alone.
Despite its merits, the solution Asos board of directors stunned other institutional investors. .
Just a few weeks prior, a «change and extension» had been agreed with existing lenders. Now they've been asked to participate in a funding round to avoid diluting their stake, with more than half of the proceeds going into the pockets of the company's consultants. Pursued by a costly adventure to support Debenhams before its collapse, Fraser's reign seethed.
In the course of the week, executives saw Asos reject an offer of bailouts in favor of a share offering guaranteed by the company's two largest shareholders.
Moreover, the bosses were extremely wary of choosing a lender.
“What were the thoughts and decisions behind refinancing existing RCF Asos with an expensive loan and Elliott-backed lender selection?” Frasers executives asked in a letter to colleagues at Asos.
«Has any attention been paid to the position of Asos shareholders, US fund operations, and their own-loan strategy?» they added, suggesting Elliott might be looking to swap the Bantry Bay loan for shares the next time Asos runs out of cash.
Meanwhile, rumor mill Square Mile came up with another scenario: could Holch take the business into private hands himself? Schroders, another Asos investor who was apparently not involved in the fundraiser, called and answered calls last week as speculation circulated.
Holch Povlsen was only 28 years old when his father handed over the reins of the Bestseller family business. He turned the business into a large retail chain that today spans the entire planet.
Bestseller employs more than 18,000 people in online stores and stores, of which 2,400 are in the company. He is also the second-largest investor in Zalando, an online retailer with low working capital that Asos is targeting, according to some analysts.
Not only does he diversify into land and real estate, but he is a major investor in Klarna's payment business. Until the £410m takeover of Deutsche Bank is completed, he is the largest shareholder in mid-sized investment bank Numis, one of Asos' in-house brokers.
Ashley's chance to get her hands on Topshop, the crown jewel of Sir Philip Green's retail empire that Asos acquired at the administration's behest in 2021, has an almost magnetic appeal.
Asos told city officials the loan of £275m and a shareholder injection will provide “increased flexibility in a challenging macro environment and stability to focus on long-term value creation.”
But many analysts say a «corporate event» — urban jargon for a takeover — could be on the horizon.
Frasers declined to comment this weekend.
An Asos spokesman said the refinancing was a «major milestone» that will give the company «increased flexibility in challenging macroeconomic conditions».
They added: «The capital increase that was part of the refinance was open to participation by all shareholders.»
Liz Kaae, chief executive of Heartland, the holding company representing the Holch Povlsen family, said the company does not comment on the rumours.
However, she said: “We are delighted to be part of Asos and have also supported the share offering, which reflects our confidence in Asos' long-term future.
«This investment will undoubtedly provide a stronger foundation and greater operational freedom for Asos management to pursue its ambitions, strategies and plans.»
Danish The billionaire who moved to Scotland 15 years ago became a surprise star in an episode of the BBC's Highland Cops earlier this year. The traffic police followed him for several miles after they were caught driving at 82 mph in a 60 mph zone.
Showing the results on the speedgun, Holch Povlsen remarked: «It's all right… [it's] a nice sunny day, no traffic.»
The Asos board may believe it has some space for breathing. But their biggest investor is a person who is in a hurry.
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