The news about THG, originally known as The Hut Group, was fast and furious.
The rags-to-riches story of millionaire boss Matthew Moulding, the Instagram photos of his muscled body, stripped to his waist, the dealmaking, the founder of a UK-based digital company, the hefty bonus scheme: it seemed endless.
Last year, when Mr. Moulding’s fast-growing health and beauty company, which includes a potentially lucrative software division, went public on the London stock exchange, the hyperactive media went into overdrive about a tremendous commercial success and a big personality.
The company’s diverse portfolio of brands, including ESPA, Perricone MD, and Illamasqua, and online beauty shop Lookfantastic, received a lot of attention.
The bubble has now burst, though it was most likely a slow deflation over several months.
THG’s value has been wiped out by a series of challenges to its structure, corporate governance, and a deal with Japanese investor Softbank to purchase a stake in its technology business, Ingenuity. But, with Mr. Moulding now hinting that he may retake the company private just over a year after it floated, the saga is far from over.
Even though THG is a publicly-traded company owned by its shareholders, Mr. Moulding held a “golden share” that gave him rare powers to veto a takeover of the company until recently.
The founder, who owns a 22 percent stake in THG, is also chairman and CEO, which puts the company at odds with City corporate governance guidelines, which recommends that the roles be separated. THG also pays Mr. Moulding around £19 million per year after taking control of some of the company’s lands around the time of the float and now leases them back to the company.
Mr. Moulding and his wife Jodie also have a £100 million personal loan from Barclays that is secured by THG shares.
However, the company now claims that the couple is no longer using THG shares as collateral for the loan, which appears to be still active. Unease had been building for some time about this corporate governance structure.
Mr. Moulding updated shareholders on trading and, in particular, its Ingenuity technology division at a meeting last month. It’s still unclear what happened, but investors were not pleased with what they heard. There are reports that they didn’t hear much because the update contained very little relevance to the business.
Source: BBC News
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