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Ahead of board meeting, ex-Zilingo CEO Ankiti Bose endorses cofounder's proposal to buy company


Bengaluru: Ahead of a crucial board meeting on Monday which may decide the fate of Singapore’s troubled business to business (B2B) fashion startup Zilingo, Ankiti Bose, the ousted CEO of the company, has endorsed a proposal by his estranged cofounder Dhurv Kapoor to avoid liquidation of the firm.

In an email sent by Kapoor and endorsed by Bose, Kapoor proposed to pay up $48 million in outstanding debt and infuse additional $8 million in fresh equity into the company.

ET has reviewed a copy of the email.

“I have been working to preserve the value and take the company forward. I am pleased to now present a specific proposal for an MBO (management buyout that I have attached with this email,” Kapoor said in the email dated June 19.

Bose responded to Kapoor’s email saying she endorsed the management buyout proposal and urged the board to see “beyond the personal differences here and do what’s right.”

“As founders it is our ultimate responsibility to make sure that we do whatever it takes to make sure the lights stay

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on at Zilingo and in the homes of the hundreds of people who are part of it. No matter what our differences may be, at the end of the day we started this company with the same goal. Today we have come together to fight for that same goal,” Bose said in a statement shared with ET.

“I firmly believe in the company’s core proposition and believe that given time and the right team, the company’s operations can be revived in due course. This will reinstate value for lenders and shareholders of the company. The MBO proposal attached here is reflective of this belief and commitment,” Kapoor said in his note dated June 19. “I make this offer on the basis of firm investor commitments and having appointed legal and financial advisers in respect of the MBO (collectively, “investor group”). To give comfort to the board, shareholders and lenders, the

investor group is happy to meet with each of the stakeholders on their credentials and ability to consummate the MBO,” he said.

Strand Hanson is the investment banker responsible for putting together a deal to potentially buyout other investors in the company. It is not yet clear as to what valuation the buyback would take place and if at all it will go through.

Zilingo had last raised $226 million in a funding round in 2019, led by existing investors Sequoia Capital, Singapore’s sovereign wealth fund Temasek and others, after which it was valued at $970 million. It also raised a bridge round of $35 million from existing shareholders in 2021. Its valuation is likely to have been eroded significantly due to the ongoing crisis at the firm.

An email sent to Zilingo didn’t elicit a response on the matter.

“ This offer is a preliminary non-binding offer, and the exact structure will be finalised by the investor group based

on discussions with the directors, shareholders and lenders. However, the investor group and I firmly believe that the best outcome for all parties would be an expeditious scheme of arrangement which allows preservation of Zilingo’s business as it stands today.,”

Kapoor’s note to the company board said. “Given the potential of the business and the value you know this company can achieve, I urge you to consider the MBO as a preferred alternative to voluntary liquidation.”

The proposal doesn’t mention if Bose will be back at the firm if an agreement is reached. Bose,
who
was was ousted on May 20, along with Kapoor and the management of Zilingo hold about 25% in the firm.

In May, Kapoor who had a fallout with Bose, had
written to the company’s employees, addressing allegations of sexual harrasment and toxic work culture surrounding the startup. In an internal memo to employees on Wednesday, Kapoor wrote, “You may have heard that there is an allegation made that certain individuals at Zilingo ‘suppressed’ complaints of harassment. We’ve always had a culture that does not tolerate sexual harassment, workplace harassment, bullying or intimidation… In rare cases when workplace issues were reported, we’ve always followed due process and taken strict action.”

In
an interview with ET after her being officially fired, Bose had said this wasn’t the end of the Zilingo saga.

“Following an investigation led by an independent forensics firm that was commissioned to look into complaints of serious financial irregularities, the company has decided to terminate Ankiti Bose’s employment with cause, and reserves the right to pursue appropriate legal action,”
a company statement had said at the time of firing its CEO last month.

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