- Chrysalis lost approximately 90% of its purchased shares from July 2021 to late 2022
Revolution Beauty has received a pre-litigation 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 had falsely inflated its sales figures, announced on Friday that the company had suspended its shares in 2022 after an investigation found it had falsely inflated its sales figures. We informed investors that there were certain allegations.
This marks the latest stage in a shareholder dispute in Revolution Beauty’s short but eventful life as a publicly traded company.
Revolution Beauty said it is disputing the claims made by Chrysalis, which bought the stock in July 2021 and sold it in late 2022 after its value fell 90%.
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Chrysalis went public in 2018 and has a portfolio of unlisted companies looking to grow and go public. The post-pandemic slump in the value of these types of growth stocks has hurt the fortunes of closed-end funds.
Currently, Chrysalis stock is trading at an impressive discount of 43.57% to net asset value, and has declined approximately 59% over the past three years.
Revolution Beauty’s share price fell by approximately 95.15% from the end of July 2021 to the end of December 2022, hitting a low of 8.25p.
The shares were listed at 170p in July 2021, with Chrysalis ultimately pocketing just £5.7m of its initial £45m investment.
Chrysalis declined further comment on the pre-action letter, but told investors in an earnings call released Monday that Revolution Beauty shares were “purchased based on the following criteria.” Ta. [of] This information was later found to contain “falsities and material omissions.”
It added: “We wrote a formal demand letter to Revolution Beauty on November 22, 2023, requesting a response within 28 days.”
“We recently received a response requesting an additional 28 days to respond. We are currently discussing next steps with our personal attorney, Travers Smith.”
AIM-listed Revolution Beauty has endured a volatile period as a listed company, most recently culminating in the completion of a Boohoo-led board coup.
Boohoo, the majority shareholder in Revolution Beauty, led the investor action that ultimately led to the departure of chief legal officer Elizabeth Lake, chairman Derek Zissman and chief executive Bob Holt.
Former Walgreens executive Lauren Brindley has been brought in as the new boss, while Boohoo vice president Alistair McGeorge has become non-executive chairman.
But Revolution Beauty turned a profit last year thanks to revenue from Boots and Superdrugstore.
In November, it was revealed that the group was close to reaching a settlement with founder Adam Minto. Mr Minto is negotiating to repay nearly £3 million for allegedly breaching his fiduciary duties to the company.
The investigation revealed that there were serious problems with the business operations under the previous management.
That included loans to employees and some distributors from Mint and Allsworth, the founders of Medichem, which Revolution Beauty acquired in 2021.
None of these loans, totaling around £1m, were disclosed to the board.
Revolution Beauty shares fell 0.7% to 29.8p in early trade.