A major former shareholder in Revolution Beauty has stepped up legal action against the troubled AIM-listed cosmetics company.
Chrysalis Investments Ltd (LSE:CHRY) is seeking £39 million from Revolution Beauty arising from a £45 million investment in the company made in July 2021, plus a further £6.3 million for “consequential losses”.
In the 2023 financial year, Chrysalis fully divested its investment in Revolution for just £5.2 million.
Chrysalis claims Revolution engaged in “deceit, negligent misstatement and/or misrepresentation” in the initial share purchase.
The company wrote a formal letter of claim to Revolution Beauty on 22 November 2023, which requested a response within 28 days.
But Chrysalis “has not been satisfied with the limited responses received from Revolution Beauty and its legal advisers to date” and thus has issued draft particulars, which is a step up in litigation proceedings.
Revolution today said it “strongly contests the allegations” and is considering its response with legal advisors.
“The company will continue to engage with Chrysalis and its advisers accordingly,” said Revolution.
Chrysalis is not the only major shareholder vexed by Revolution’s plummeting valuation (shares are down 75% over two years).
Boohoo Group PLC (AIM:BOO), which controls more than a quarter of voting rights, effectively wrested control of the board in a convoluted activist campaign that saw the ousting of chairman Derek Zissman, chief executive Bob Holt and chief legal officer Elizabeth Lake.
Former Walgreens exec Lauren Brindley was brought in as the new boss, with boohoo deputy Alistair McGeorge becoming non-executive chair.
A revenue beat posted in March delivered some good news for the beleaguered group, with Brindley stating: “It is early days, but we are already seeing positive impacts from the new strategy, including an encouraging response from our major customers and good progress on our cost savings programme.
Revolution Beauty shares dropped another 6.8% on Monday.