Shares of Manchester-based online fashion retailer N Brown Group fell about 6% on Thursday after it said it plans to raise £100 million by selling stock and move its shares to London’s junior AIM market amid a half-year fall in revenue and profit.
N Brown said the equity raise is fully supported by “substantial” shareholder David Alliance.
N Brown’s brands include JD Williams, Jacamo, Simply Be, Ambrose Wilson and Home Essentials.
First-half revenue fell 17.6% to £356.7 million and profit before tax fell 25% to £14.1 million.
N Brown shares have fallen more than 50% over the past 12 months.
The company said it is planning a conditional placing to Alliance and his son Joshua “subject to clawback under the c. £100 million open offer to all qualifying shareholders at a price of 57 pence per share (equal to the 5 day closing average, rounded to the nearest penny) and on the basis of 11 open offer shares for every 18 existing ordinary shares.”
The group said Alliance made his support for the capital raising “contingent upon N Brown seeking to cancel its admission of the existing ordinary shares to listing on the official list (premium listing segment) and to trading on the main market and the group applying for the admission of all its issued and to be issued ordinary shares to trading on AIM.”
N Brown said AIM is a “more appropriate environment, better suited to the group’s current market capitalisation and size, whilst also being a market which is operated and regulated by the London Stock Exchange.”
The firm said: “AIM is specifically designed for smaller companies, with a more flexible regulatory regime and provides a more suitable environment for growing companies …
“Companies whose shares trade on AIM are deemed to be unlisted for the purposes of certain areas of UK taxation.
“Following the move to AIM, individuals who hold ordinary shares may be eligible for certain inheritance tax benefits.
“In addition, the UK government abolished stamp duty on shares traded on AIM with effect from 28 April 2014 which may help maintain or increase liquidity in the trading of ordinary shares.”
N Brown CEO Steve Johnson said: “Having restructured the business and transitioned to more than 90% of revenues from digital, we now see a clear opportunity to capitalise on various industry drivers, not least the increasing trend towards online retail, and further improve our customer proposition.
“Today’s separately announced proposed capital raise will give us the firepower to invest further in our digital capabilities and accelerate our growth strategy, whilst significantly strengthening the group’s balance sheet to provide us with ongoing flexibility and a strong platform from which to deliver attractive returns for all of our shareholders.
“Whilst we are mindful of an uncertain UK retail environment, we are confident we can continue to build on the unique strength of the group’s brands.
“We remain focused on creating a sustainable business delivering profitable growth over the long term.”