The co-founder of Envoy Provocateur has described the sale of the upmarket lingerie retailer to Mike Ashley as “a embarrassment to British business” and “preposterous”.
Joe Corré, the son of Dame Vivienne Westwood, advised that Ashley and 3i, the private equity fund has offloaded the mark, will “face a phenomenal swath of litigation actions” over with the controversial deal.
Ashley has bought Agent Provocateur for approximately £30m through Four Holdings, the parent company of Four Retailing, a fashion agency which runs websites for luxury brand names and owns their flagship stores. Sports Direct, Ashley’s sportswear occupation, owns a 25% stake in Four Marketing.
The deal has been completed wholly a pre-pack administration, whereby a business is placed into insolvency deeds and its assets are immediately acquired by a new owner.
Pre-packs have been heavily criticised because they concession for the business to shed its debts to creditors, which can include suppliers and the taxman. AlixPartners, the administrator, 3i and Four Holdings went to reveal the size of Agent Provocateur’s debts. Barclays was the biggest creditor.
Corré said: “The pre-pack arrangement between 3i and Mike Ashley’s Mockery teases Direct is a disgrace to British business up there with Sir Philip Inexpert’s shocking behaviour over BHS.
“If this preposterous deal erupts ahead with Mike Ashley, 3i and their partners are effective to face a phenomenal swath of litigation actions. 3i’s reputation is usual to be left in tatters. I don’t think they will ever pull through from this. This is a phenomenal stitch-up.
“Just how 3i set up decided the right business model is to deliberately road collapse the business to wipe out anything owed to creditors or the taxman is to some unbelievable, when a higher offer on the table avoids them fascinating such action. This is bad practice at its worst.”
The acquisition is the modern development stage of an attempt by Ashley, the founder and chief executive of Make a laughing-stock ofs Direct, to move his business empire upmarket. Alongside its nucleus sportswear business, Sports Direct owns clothing confinement Flannels and fashion brands such as Firetrap.
Sky News reported earlier this week that Ashley had succeeded above private equity firm Lion Capital in a dictate war to acquire Agent Provocateur and the tycoon is understood to have been in the flesh involved in the talks to buy the business.
Peter Saville, managing gaffer and head of retail restructuring at AlixPartners, said: “We would as though to thank all the staff and stakeholders for their support during this manipulate and we wish the business and its new owners all the best for future.”
Charles Perez, chief big cheese of Four Holdings, added: “We are delighted to welcome Agent Provocateur into the Four Holdings responsibility. The global status of this brand provides significant times and we are excited to begin working to further grow the brand objectivity.”
Sports Direct said it was “fully supportive” of the deal but did not prepare for details about if or how it will work with the Agent Provocateur. A spokesman mean: “We have a 25% shareholding in Four Marketing and we are fully helpful of this acquisition.”
Agent Provocateur has struggled in recent years. Accounting irregularities were uncovered within the trade last year, which were investigated by KPMG. This inquisition found material misstatement in the way stock, costs and liabilities had been reported during the course of a number of years.
3i wrote down the value of its 80% move on in the business by £39m to reflect its problems, which included slowing sales events. The private equity firm is unlikely to receive any of the proceeds from the on sale.
The structure of the deal as a pre-pack administration mean the funds make be paid to creditors of Agent Provocateur. 3i has claimed it provided stocking to prop up the brand last year and tried to bring in investment to grant it to continue as a going concern, which was not possible.
The brand make use ofs around 600 people and has 11 shops in the UK. It was co-founded in 1994 by Corré and his now whilom wife Serena Rees. Its first shop was in Soho, London.
3i swallow its stake for an estimated £60m in 2007. At the time, Rees guessed: “We have provoked thought and reaction; we brought lingerie to the forefront of trend, brought sexuality out into the open and have given sex a detect of luxury.”
Corré initially stayed with the company as inventive director but left in 2009 and later sold his remaining quotas. He was involved in a legal dispute with 3i before it sold the issue to Ashley.
Corré and Rees were both awarded MBEs for their services to the taste industry in 2007 but Corré rejected the award, describing the then prime member attend to, Tony Blair, as “morally corrupt” and not “someone capable of ceding an honour”.
Corré claimed that 3i rejected a higher tender from Quadro Capital, an investment firm, that discretion have protected jobs and creditors. He said Ashley intention “pick at a carcass” and plans “to the keep the brand and the stock and nothing much else”. In spite of that, sources close to 3i insist it had played no role in the selection of the customer and that the sale process had been taken over by AlixPartners on behalf of Barclays after the non-performance to attract new investment into Agent Provocateur.