Koovs plc (AIM: KOOV), the Western fashion experts for online Indian consumers, provides the following update on the proposed issue of Compulsory Convertible Preference Shares (“CCPS”) to Future Lifestyle Fashions Limited (“FLFL”), part of Future Group, India’s largest retail group, and the Company’s 25.8 per cent. shareholder.
Koovs was informed on 18 October 2019 by FLFL that the Reserve Bank of India (the “RBI”) has requested that FLFL reapply for approval before any further subscriptions for CCPS are made by FLFL. To date, and as previously announced, FLFL has subscribed for £0.25 million of the total c. £6.81 million in CCPS that FLFL has committed to subscribe for.
FLFL has confirmed to the Company that it is in the process of reapplying for approval and has confirmed its commitment to honour its investment into Koovs, whether through the existing mechanism or an alternative route should the approval not be forthcoming. However, until such point as the RBI grants this approval FLFL is not able to subscribe for any further CCPS and accordingly it is now uncertain that the full c. £6.81 million subscription for CCPS will be completed in this calendar year, as previously had been the intention.
Koovs and FLFL will seek to understand urgently the reasons for the RBI’s recent decision and any impact on the ability of FLFL to continue to hold an investment in Koovs. In the meantime, the Company expects the other commercial initiatives in place between it and FLFL to continue as normal.
The Company currently has cash reserves of c. £3.3m which is sufficient for the current calendar year. As noted above, the Company will work with FLFL to secure the committed investment, alongside consideration of other fundraising options available to the Company in the event there is a protracted delay in the RBI approval process.
The strategic partnership between FLFL and Koovs remains strong and ongoing. The previously announced Brand Factory Contract for Koovs to develop an exclusive range of menswear under the Chelsea King brand name and the concession expansion roll out in FLFL’s Brand Factory and Central Stores are both well under underway and will continue.
The Company will provide a further update to the market as soon as possible.
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