THG chief executive Matthew Molding has unwound a pledge of shares as security for a personal loan as the e-commerce group struggles to restore confidence after a sharp drop in stock prices.
The company revealed in September that an entity controlled by co-founder Molding had accepted a loan from Barclays guaranteed for around THG 182 million shares. Of these, 28m were held by Molding, 9.8m by his wife Jodie and 144m by the holding company.
However, on Wednesday, THG said the shares were no longer pledged against the loan, and no shares owned by an individual or the holding company were subject to a stock guarantee or pledge. He also added that no shares were sold as part of the switch.
The unwinding of the collateral removes any possibility that shares could be sold to meet a margin call from the bank, although this was unlikely to happen anyway, as the loan facility was of a minimum. amount “up to £ 100million” and even after the recent slide. in the THG share price the collateral was still worth around £ 600million.
This is the latest in a series of steps taken by THG, whose brands include Lookfantastic and Espa, to address investor concerns about transparency and governance after its share price fell sharply during the month. latest. The company said Monday that Molding would forgo “special action” that gives it the power to veto a hostile takeover earlier than expected.
He also pledged to move from a standard stock quote to a premium listing, which would require more demanding corporate governance and make the stock eligible for inclusion in the FTSE indices, and to conduct a broader review. governance.
The directors also bought shares; non-executive director Damian Sanders acquired almost £ 50,000 last week.
However, it has yet to fully respond to complaints from the investment community about the lack of transparency regarding the profitability of its THG Ingenuity division, which provides e-commerce technologies and services to consumer goods groups wishing to sell. in line.
Japanese tech investor SoftBank has an opportunity to acquire one-fifth of Ingenuity at a price that values the unit at £ 4.5bn, but Ingenuity’s revenue last year was only of £ 137million and its sales growth has been slower than any other in the group. units.
Its profits and margins have never been specified and the contractual terms between it and other THG business units are unclear.
A recent Ingenuity-focused capital markets day ended up accelerating the fall in the THG share price, which, despite a rally in recent days and a 1.5% gain on Wednesday, remains a third below the 500p at which it was floating in September 2020.
The overall market value of the company is also lower than the valuation SoftBank’s option places on Ingenuity alone, leading some analysts to fear that the company may choose not to exercise it. THG said it expects the option to be exercised in the first half of 2022, once Ingenuity’s legal separation from its other businesses is completed.