Agent Provocateur‘s co-founder has said the sale of the lingerie retailer to an agency backed by retail tycoon Mike Ashley was “a disgrace to British business” and a “phenomenal stitch-up”.
Joe CorrÃ©, the son of iconic fashion British designer Vivienne Westwood, told The Guardian that the “preposterous” transaction between private equity firm 3i and Four Holdings will “face a phenomenal swath of litigation actions”.
Yesterday, Agent Provocateur was offloaded by 3i in a pre-pack administration deal that was worth around £27.5 million.
The acquisition was done via Four Holdings, the parent company of Four Marketing, an agency that operates luxury fashion brands‘ websites and owns their flagship stores.
Sports Direct — of which Ashley is the founder, chief executive and majority owner — has a 25 per cent stake in Four Marketing.
“The pre-pack arrangement between 3i and Mike Ashley‘s Sports Direct is a disgrace to British business up there with Sir Philip Green‘s shocking behaviour over BHS,” CorrÃ© told The Guardian.
A pre-pack administration is when a business is placed into insolvency proceedings and its assets are immediately acquired by a new owner.
They are often criticised as business are able to shed its debts to creditors, and the details of Agent Provocateur‘s debts have not been disclosed.
“If this preposterous deal goes ahead with Mike Ashley, 3i and their partners are going to face a phenomenal swath of litigation actions,” CorrÃ© told The Guardian.
“3i‘s reputation is going to be left in tatters. I don‘t think they will ever recover from this. This is a phenomenal stitch-up.
“Just how 3i have decided the right business model is to deliberately road crash the business to wipe out anything owed to creditors or the taxman is quite unbelievable, when a higher offer on the table avoids them taking such action. This is bad practice at its worst.”
3i put Agent Provocateur up for sale in January as it struggled from difficult trading conditions and an accountancy error in November that wrote down the value of the business by £39 million.
Speculation that the retailer would enter administration became apparent when 3i appointed restructuring firm AlixPartners as principal advisor on the sale process.
Ashley reportedly entered the race to purchase the struggling retailer earlier this week, with speculation that he was personally involved in the talks. Other bidders included French womenswear brand Etam and private equity firms like Lion Capital and Terra Firma Capital Partners.
Charles Perez, chief executive of Four Holdings said: “We are delighted to welcome Agent Provocateur into the Four Holdings business. The global status of this brand provides significant opportunities and we are excited to begin working to further grow the brand equity.”
While Sports Direct said it supported the acquisition, it did not provide details on how it would work with Agent Provocateur.
“We have a 25 per cent shareholding in Four Marketing and we are fully supportive of this acquisition,” a spokesman said.
Agent Provocateur was co-founded in 1994 by CorrÃ© and his former wife Serena Rees.
3i acquired its stake in the business in 2007 for an estimated £60 million.
At first, CorrÃ© stayed with the company as creative director but left in 2009 and later sold his remaining shares and getting involved in a legal dispute with 3i.
Agent Provocateur employs around 600 people and has 11 shops in the UK.