In The Style proposes sale of operating subsidiary for £1.2m and delisting from AIM
In The Style is proposing to sell its only operating subsidiary for £1.2 million in a deal that will lead to the fashion brand's delisting from AIM and avoid placing the business into administration.
Following a strategic review the digital-led, influencer-driven fashion business is proposing to sell In The Style Fashion Limited (ITSFL) to investor Baaj Capital for just £1.2 million. This offer included a pre-condition that In The Style founder and CEO Adam Frisby agrees to take an equity position in ITS Holdings 2023 Limited ('Bidco') – a newly established company formed for the purposes of the sale – equivalent to his current holding in the company.
Upon completion of the sale the listed In The Style company will change its name to Itsum plc to avoid confusion with the In The Style brand. Itsum will become a cash shell and will cease to own, control or conduct all of the company's existing trading business. The existing business will transfer to the newly formed Bidco. The move prevents an administration for the entire business.
Lincoln International led the strategic review and In The Style chairman Jim Sharp said it had considered a number of other options with "numerous parties" but concluded that "it is in the best interests of the Company, its Shareholders and its stakeholders to sell In The Style Fashion Limited to Bidco.
"The Independent Directors therefore believe that under the new ownership structure – with Adam’s continued leadership and Baaj’s backing – the In The Style brand can continue to build on its potential whilst protecting the interests of the Group’s employees, suppliers and other stakeholders."
Proceeds from the sale will amount to £500,000 which will be distributed to current shareholders valuing their shares at 0.0025p each. Shares are currently trading at less than 2p having slumped more than 70% in value this morning on the back of the news.
In The Style announced its strategic review in December and revealed in a trading update in January that performance had deteriorated. The board said it expected revenue for the full year to 31 March 2023 to be in the region of £46 million. The adjusted EBITDA loss for the year is likely to be towards the higher end of the previously guided range of between £4.25 million to £4.75 million. The Group’s cash position has fallen from £3.2 million at 31 December to £0.9 million at 28 February.
The business was floated on AIM in 2021 with a value of £105 million but its share price has been on a downward trajectory since March last year when shares were trading at around 90p.
No potential bidder that came forward during the strategic review had offered to purchase the entire company but Baaj, parent of menswear retailer Blue Inc among others, made its offer on the pre-condition that Frisby also invested and stayed with the business. Baaj, a family office, prefers to invest in businesses where it works with he current owners and management teams.
Frisby who founded the business 10 years ago recently won a court battle with Paul Clements who claimed the entrepreneur had taken his idea for the business, which collaborates with celebrities and influencers (including TV personality Stacey Solomon, pictured with Frisby above), to create capsule collections in which they take a share of the sales to ensure they are invested in its success. A judge dismissed the claims by Clements, who said he was "considering his options" in light of the ruling.