- Chrysalis lost nearly 90% in share purchases between July 2021 and the end of 2022
Revolution Beauty has received a pre-action letter from a former investor seeking potential claims against the group.
The cosmetics group, whose shares were suspended in 2022 after an investigation found the company falsely inflated sales figures, told investors on Friday that the potential claims relate to shares that were never invested in. The trusts were owned by Chrysalis Investments.
It marks the latest phase of shareholder disputes in Revolution Beauty’s short but tumultuous life as a listed company.
Revolution Beauty said it disputes the allegations made by Chrysalis, which bought the shares in July 2021 and sold them in late 2022 after their value dropped by 90 percent.
Revolution Beauty’s cooked book scam continues
Chrysalis listed in 2018 with a portfolio of unquoted companies that are looking to grow and go public. The decline in value of such growth stocks following the pandemic has hurt the fortunes of closed-end funds.
Currently trading at a 43.57 per cent discount to net asset value, Chrysalis shares are down nearly 59 per cent over the past three years.
Revolution Beauty shares fell almost 95.15 per cent between the end of July 2021 and December 2022, to a low of 8.25p.
Shares listed at 170p in July 2021, and Chrysalis took home only £5.7 million of its initial investment of £45 million.
Chrysalis, which declined to comment further on the pre-action letter, told investors in financial results published on Monday that Revolution Beauty shares were purchased ‘on the basis [of] Information’ which was later found to contain ‘misstatements and material omissions’.
It said: ‘The company wrote a formal letter of claim to Revolution Beauty on 22 November 2023, requesting a response within 28 days.
‘Recently a response has been received asking for an additional 28 days to respond. The company is now considering next steps with its appointed lawyers, Travers Smith.
AIM-listed Revolution Beauty has endured a shaky existence as a listed business, recently culminating with the completion of a Boohoo-led boardroom coup.
Revolution Beauty’s majority shareholder Boohoo led the investor action that ultimately led to the departure of Chief Legal Officer Elizabeth Lake, Chairman Derek Zisman and Chief Executive Bob Holt.
Former Walgreens executive Lauren Brindley was brought in as the new boss, with Boohoo deputy Alistair McGeorge becoming non-executive chairman.
But Revolution Beauty turned profitable last year, thanks to revenue from Boots and Superdrug stores.
In November, it emerged that the group was close to a deal with its founder Adam Minto, who is in advanced talks to repay almost £3 million over allegations he breached his fiduciary duties towards the company.
The investigation found serious issues in the running of the business under the previous management.
This included loans from Minto and Allsworth, founders of Medichem – which was acquired by Revolution Beauty in 2021 – to an employee and some distributors.
None of these loans, worth a total of approximately £1 million, were disclosed to the Board.
Revolution Beauty shares were down 0.7 per cent at 29.8p in early trading.
Source: www.dailymail.co.uk
