Koovs clinches investment and media deal with Hindustan Times owner

By

Sandra Halliday

Published
Jun 18, 2018

Koovs must be relieved after announcing a media-for-investment deal on Monday. The London listed company that mainly targets the Indian market, has been facing a cash flow crisis in recent periods and has been focused on preserving cash, but on Monday it said it has struck a deal worth £24 million.

It has entered into a conditional agreement for a two-year deal with strategic partner HT Media Limited, which is one of India's largest media companies and owner of the Hindustan Times.

Under the agreement, the company will acquire four £6 million tranches of media from HT Media at six monthly intervals, 70% of which (£4.2 million each time) “will be satisfied by the issuance of new ordinary shares in the company to HT Media,” with the remaining 30% (£1.8 million each time) to be paid for by Koovs in cash.

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Analysts at Hardman & Co said: "We would expect this deal to provide significant encouragement to other investors looking to fund Koovs' next stage of development. We have not yet adjusted any of our forecasts as the deal remains conditional on further fundraising, which has not yet been agreed - but the company remains confident that terms will be agreed."

The deal is conditional on an initial cash raise of at least £6 million by the company with Koovs saying it has “already had positive discussions with existing and potential new shareholders regarding support for the Initial equity raise. The exact amount of new capital to be raised under the Initial equity raise will be determined by the board in discussion with investors.”

Under the agreement, HT Media will not be obliged to acquire more than 20% of the company's prevailing total issued share capital and the agreement is also subject to the firm’s prevailing market value not being below a nominal level during its course.

That seemed to be no problem on Monday as the company’s shares surged almost 23% on news of the deal.
Koovs also said the deal means that it will have successfully concluded the first stage of its fundraising strategy to raise a total of up to £50 million of investment to fund its strategic plan. 

CEO Mary Turner said: “[The] completion of the first round of funding for our strategic acceleration plan, [will provide] us with an important platform to support our future growth. As India's best-established affordable fashion brand, we are resolutely focused on scaling the business to leverage our competitive advantages in what is the world's fastest-growing economy.”