Sports Direct buys off Agent Provocateur

March 6, 2017 written by
Sports direct buys off Agent Provocateur

Lingerie firm Agent Provocateur after much suspense and wait has been bought by a firm linked to Sports Direct owner Mike Ashley soon after it was placed into administration.

It was right at the beginning of this year that the news for Luxury lingerie chain Agent Provocateur going up for sale was declared owing to the brand’s failure in not being able to churn out much profit from their business. Seeking an offer in excess of Agent Provocateur’s £30m debt, the brand had put itself out for sale. Agent Provocateur , private equity firm 3i was however struggling to find a buyer for the business and it was decided that if the existing situation persisted then the brand might be passed into the hands of its lenders as its private equity owner.

3i however soon understood that is was hard to find a buyer, which is willing to pay more than the £30m value of Agent Provocateur’s debts, and offers till February have been beneath that amount, according to the last report . The private equity firm acquired a controlling stake in the business for £60m 10 years ago from its co-founder Joe Corré, the son of fashion designer Dame Vivienne Westwood. Private equity group 3i has owned the struggling company since 2007.

Agent Provocateur has 10 stores in the UK and employs around 600 people. It is not known if there will be job losses. It has been reported that the firm linked to Mr Ashley paid around £25m after seeing off competition from private equity firm Lion Capital. The lingerie firm was sold via a so called “pre-pack deal” – that means a buyer is lined up to buy the assets of a company, but crucially not its liabilities, such as its debt and pension deficit.

It is usually agreed before the company is publicly declared to be in financial difficulty. Defenders of such deals argue that they allow a company to survive and protect jobs. The deal was done through investment vehicle Four Holdings, which is a third-owned by Sports Direct, according to Companies House filings.

A pre-pack administration is one in which the insolvent company has already lined up a buyer for its profitable assets before it enters administration, allowing a sale within days. It allows a firm to write off its debts and helps it close down loss-making parts of the business.

Sports Direct’s profits have suffered after criticism of work practices at its Derbyshire warehouse too. To move away from the losses Mr Ashley appears keen to target more upmarket fashion retail, moving away from the cheaper end of the High Street. In this attempt, In February he acquired a 11% stake in fashion chain French Connection, and owns a controlling stake in the premium retailer Flannels, among other interests. Agent Provocateur is certainly a new addition to this new path adapted by the billionaire.

 

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