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Troubled online fashion retailer Boohoo has been dealt a blow after a prospective buyer pulled out of talks to acquire its London office and help shore up its balance sheet.
It is understood that an Israeli property investor has abandoned plans to acquire the office in Soho for around £60m amid concerns raised by a survey.
Bosses are seeking cash to meet a £47m debt repayment looming in August next year, against the backdrop of a power struggle between co-founder Mahmud Kamani and Frasers tycoon Mike Ashley.
Boohoo spent £72m on buying its six-storey office building, at 10 Great Pulteney Street, just three years ago to house its fast-expanding brand portfolio. It is expected by market sources to make a loss on a sale.
The original purchase followed empire-building deals for stricken department store chain Debenhams and former Arcadia labels Burton, Dorothy Perkins and Wallis, as well as clothing brands Karen Millen, Oasis and Coast.
Mr Ashley has warned against a “fire sale of assets at knockdown prices” by Boohoo as it attempts to navigate the financial crunch caused by tumbling sales.
A spokesperson for Boohoo said: “We are in active negotiations with regard to the sale of our London office.”
Boohoo is gearing up for a crunch shareholder vote next week, in which Mr Ashley will attempt to gain a seat on the Boohoo board alongside Michael Lennon, a restructuring expert.
The Frasers Group founder is urging investors to back his plan, claiming it represents the “best and most credible path to profits”. Mr Ashley said in a recent letter that Boohoo’s management had created a “catastrophic mess” and driven the firm’s shares down by 50pc over the past five years.
However, leading shareholder proxy groups ISS and Glass Lewis have said investors should vote against the plan.
Mr Kamani has also repeatedly rebuffed Mr Ashley’s proposal, with tensions escalating between the pair in recent weeks.
It emerged earlier this month that Boohoo has stepped up its security following claims that Mr Kamani and other senior executives were followed in recent months. Employees in Manchester, where Boohoo is based, also reportedly saw drones flying outside their offices.
Drones have also been seen flying around Frasers’ Soho offices, The Telegraph can reveal, fuelling fears of tit-for-tat surveillance.
Boohoo’s faltering property sale comes after chief executive John Lyttle stepped down as chief executive, replaced by Debenhams chief Dan Finley.
The retailer has also begun a review that could result in splitting off or selling off some of its brands, which also includes Nasty Gal and PrettyLittleThing. Boohoo’s sales fell by 15pc to £620m in the six months to September, compared with the previous year, while earnings fell from £31m to £21m.