Salford-based online fashion brand In The Style, which is promoted by the likes of Stacey Solomon, has agreed to sell itself for £1.2m in a bid to avoid administration.
The company, which was founded by now-millionaire Adam Frisby in his bedroom in 2013, is to be bought by private equity firm Baaj Capital LLP.
In The Style had been worth £105m when it floated on the London Stock Exchange's secondary AIM market in March 2021. However its value has been slashed by 95% since then.
READ MORE: Click here to sign up to the BusinessLive North West newsletter
The news comes after Mr Frisby won his High Court battle against a rival who claimed he stole his business idea. The founder was sued by businessman Paul Clements who had claimed the name and concept of the Salford company had come from him.
In The Style is the latest Greater Manchester fashion company to hit rocky waters. Last year, Missguided was sold out of administration to Mike Ashley's retail empire, Frasers Group. I Saw It First was also acquired for a discount price after racking up debts while Lavish Alice put its wholesale arm into administration last month amid a major restructure.
In a statement issued this morning, In The Style said it had agreed to sell its only operating company, In The Style Fashion.
The offer includes a condition that Mr Frisby takes a stake in ITS Holdings 2023 Limited (Bidco), a newly-established company formed for the purposes of the sale and to also become chief executive of ITSFL on completion.
In The Style said that during the process, which was led by Lincoln International, it "had positive engagement" with several potentially interested parties but that some made proposals that were "not deemed by the board to be deliverable on an acceptable timescale". It added that none of the proposals involved an offer for the whole company.
The strategic review was kicked off in December at the same time as Mr Frisby returned as interim chief executive, replacing Sam Perkins.
At the time, the company said "the outcome of the strategic review may or may not result in a sale of the company or some or all of the group's business and assets".
In a statement to the London Stock Exchange, In The Style said: "Considering, amongst other factors, the comprehensive review of options undertaken as part of the strategic review, the company's near-term trading environment, its current liquidity position and Baaj's scale and extensive sector expertise, the directors other than Adam Frisby have unanimously concluded that it is in the best interests of the company, its shareholders and other stakeholders to sell ITSFL to Bidco."
Chairman Jim Sharp said: "Following a thorough review of different strategic options with our advisers and interactions with numerous parties, the independent directors have unanimously 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."
Non-executive directors Nancy Cruickshank, Adam Bellamy and Matthew Scaife will also step down from the board on completion.
The company is also proposing to change its name to Itsum plc on completion to avoid any confusion with the In The Style brand and to reflect it becoming a cash shell.
On its current trading, In The Style said: "The trading environment through January and February remained challenging as was anticipated following the Christmas period, reflecting cost-of-living pressures on our customers, high levels of markdown and a reduction in wholesale demand.
"The company's cash position at 31 December 2022 and 28 February 2023 was £3.2 million and £900,000 respectively. At both dates, the invoice discounting facility of £400,000 remained undrawn.
"As a result of this expected reducing cash balance and the expectation that the trading environment will remain challenging in the near term, the board is of the opinion that, in the absence of raising further funds or completion, there would be no alternative other than the company and ITSFL to enter into administration or some other form of insolvency procedure in due course."
In January the business warned it will lose more than previously expected during its current financial year.
The company revealed it was now forecasting its full-year adjusted EBITDA loss will be between £4.25m and £4.75m. It added it now also expected its revenue to be around £46m.
In the 12 months to the end of March 2022, In the Style reported a revenue of £57.3m, up from £33.7m, and pre-tax losses of £1.5m compared to a profit of £125,000 in the prior year.
In January, In The Style said its revenue drop reflected "market-wide cost-of-living pressures on consumer demand, higher levels of markdowns and a reduction in wholesale demand".
READ NEXT:
