Ted Baker, the high street fashion brand, will next week launch an attempt to raise virtually its entire market capitalisation as it joins the queue of companies seeking funds to survive the COVID-19 pandemic.
Sky News has learnt that Ted Baker will unveil a placing and open offer to target roughly £80m from the sale of new shares as soon as Monday morning.
The company, which was left reeling by a string of internal governance and accounting rows last year, is understood to be close to proceeding with the fundraising after consulting with leading shareholders.
Its biggest investor is Ray Kelvin, Ted Baker’s founder, who left the company in March last year following allegations of “forced hugging” and other inappropriate behaviour.
Since then, the company has lurched from one crisis to another, announcing a string of profit warnings and a massive stock overstatement that raised questions about its survival prospects.
It was unclear on Friday evening whether Mr Kelvin would choose – or be able – to commit the roughly £28m he would need to retain his current 35% stake if the fundraising is successful.
If he does not, he faces seeing his shareholding substantially diluted.
Other big investors in the company include Schroders, Columbia Threadneedle and Toscafund.
Ted Baker has not updated investors on its finances since March 23, when it announced that it had secured an additional £13.5m of borrowing headroom from lenders.
It also announced the sale and leaseback of its headquarters near Kings Cross, known as The Ugly Brown Building.
Those moves to raise cash came shortly before the company confirmed that finance chief Rachel Osborne would become its permanent chief executive.
More recently, it named the easyJet chairman – and former Next chairman – John Barton as its next non-executive chair.
Lenders to Ted Baker have been working with advisers from FTI Consulting to undertake an assessment of its prospects since before the coronavirus pandemic began.
This week, the company said it would begin a gradual reopening of its stores from mid-June.
The retailer’s shares have plummeted during the last 15 months, and closed on Friday at 153.3p, almost 13.5% lower on the day and down 89% over the last year.
Its market value has plunged to just under £80m.
Mr Kelvin had been linked with a possible bid to take the company private, although there is no indication that he has any such plan.
Its stock overstatement may also pose a headache for its auditor, KPMG.
In 2018, the big four firm was fined £3m by the Financial Reporting Council for breaching the watchdog’s ethical standards in relation to non-audit services provided to the fashion retailer.
The penalty was reduced to £2.1m because KPMG proactively settled it.
Goldman Sachs and Liberum are understood to be working on the capital-raising process.
In response to Sky News’ report, Ted Baker said it “notes recent press comment regarding the possibility of the company undertaking an equity issue”.
“Since the company’s strategic update on 26 February, Ted Baker, along with many businesses, has seen a marked impact on trading due to government actions to limit social interaction and movement.
“This, in addition to trading pressures from the last financial year, makes the need for a wider transformation more acute.
As a result, the company is in an advanced stage of preparation for a placing and open offer as part of a broader package of measures that the company has put in place to significantly strengthen the balance sheet.”
Next week from Monday to Thursday, Dermot Murnaghan will be hosting After the Pandemic: Our New World – a series of special live programmes about what our world will be like once the pandemic is over.
We’ll be joined by some of the biggest names from the worlds of culture, politics, economics, science and technology. And you can take part too.
If you’d like to be in our virtual audience – from your own home – and put questions to the experts, email [email protected]