Koovs PLC (LON: KOOV) have seen their shares sink across Monday trading, amid talks between shareholders over a major financial investment.
Shares of Koovs sunk 29.6% to 2p on Monday. 18/11/19 15:04BST.
The India focused online fashion retailer said that it continued to negotiate with major shareholder Future Lifestyle Fashions Ltd (NSE: FLFL) for completing its £6.5 million investment.
Future Lifestyle Fashions is a subsidiary of Indian retail giant Future Group (NSE: FRETAIL).
FLFL holds a 26% in Koovs, and have previously invested £250,000 for 881,523 preference shares valued at 28.36 pence each.
The terms of this investment outline that these shares will convert to ordinary shares in June 2020.
The capital infusion was paused after the Reserve Bank of India asked FLFL to reapply for approval before any further subscriptions are made.
“FLFL has confirmed to the company that it is in the process of reapplying for approval of the investment from the Reserve Bank of India and that it remains committed to honouring the investment,” Koovs said.
Koovs also said that it is “actively considering all other financing alternatives available to it.” The company currently has cash reserves of around £2.2 million which is sufficient for 2019.
In the fashion and retail industry, competitors have seen shares become volatile after periods of uncertain and tough trading.
Laura Ashely (LON: ALY) saw their shares dip after their Finance Chief left, additionally Superdry (LON: SDRY) informed shareholders of an annual loss back in July.
There is a chance however, that FLFL will see potential in this investment as Koovs have experienced a solid few months of trading.
Koovs in late October reported impressive fundamentals in their second quarter update, despite the ongoing uncertainty investment.
The Group’s headline figure was its 100% year-on-year gross order value growth, from £2.5 million to £5.0 million, which may give enough appetite to FLFL to see out the remainder of the investment which was originally planned.
