The co-founder of Agent Provocateur has described the sale of the upmarket lingerie retailer to Mike Ashley as “a disgrace to British business” and “preposterous”.
Joe Corré, the son of Dame Vivienne Westwood, warned that Ashley and 3i, the private equity fund has offloaded the brand, will “face a phenomenal swath of litigation actions” over the controversial deal.
Ashley has bought Agent Provocateur for around £30m through Four Holdings, the parent company of Four Marketing, a fashion agency which runs websites for luxury brands and owns their flagship stores. Sports Direct, Ashley’s sportswear business, owns a 25% stake in Four Marketing.
The deal has been completed through a pre-pack administration, whereby a business is placed into insolvency proceedings and its assets are immediately acquired by a new owner.
Pre-packs have been heavily criticised because they allow the business to shed its debts to creditors, which can include suppliers and the taxman. AlixPartners, the administrator, 3i and Four Holdings declined 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 Sports Direct is a disgrace to British business up there with Sir Philip Green’s shocking behaviour over BHS.
“If this preposterous deal goes ahead with Mike Ashley, 3i and their partners are going to face a phenomenal swath of litigation actions. 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.”
The acquisition is the latest stage of an attempt by Ashley, the founder and chief executive of Sports Direct, to move his business empire upmarket. Alongside its core sportswear business, Sports Direct owns clothing chain Flannels and fashion brands such as Firetrap.
Sky News reported earlier this week that Ashley had risen above private equity firm Lion Capital in a bidding war to acquire Agent Provocateur and the tycoon is understood to have been personally involved in the talks to buy the business.
Peter Saville, managing director and head of retail restructuring at AlixPartners, said: “We would like to thank all the staff and stakeholders for their support during this process and we wish the business and its new owners all the best for future.”
Charles Perez, chief executive of Four Holdings, added: “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.”
Sports Direct said it was “fully supportive” of the deal but did not provide details about if or how it will work with the Agent Provocateur. A spokesman said: “We have a 25% shareholding in Four Marketing and we are fully supportive of this acquisition.”
Agent Provocateur has struggled in recent years. Accounting irregularities were uncovered within the business last year, which were investigated by KPMG. This investigation found material misstatement in the way stock, costs and liabilities had been reported over a number of years.
3i wrote down the value of its 80% stake in the business by £39m to reflect its problems, which included slowing sales. The private equity firm is unlikely to receive any of the proceeds from the sale.
The structure of the deal as a pre-pack administration mean the funds will be paid to creditors of Agent Provocateur. 3i has claimed it provided funding to prop up the brand last year and tried to bring in investment to allow it to continue as a going concern, which was not possible.
The brand employs around 600 people and has 11 shops in the UK. It was co-founded in 1994 by Corré and his now former wife Serena Rees. Its first shop was in Soho, London.
3i bought its stake for an estimated £60m in 2007. At the time, Rees said: “We have provoked thought and reaction; we brought lingerie to the forefront of fashion, brought sexuality out into the open and have given sex a sense of luxury.”
Corré initially stayed with the company as creative director but left in 2009 and later sold his remaining shares. He was involved in a legal dispute with 3i before it sold the business to Ashley.
Corré and Rees were both awarded MBEs for their services to the fashion industry in 2007 but Corré rejected the award, describing the then prime minister, Tony Blair, as “morally corrupt” and not “someone capable of giving an honour”.
Corré claimed that 3i rejected a higher offer from Quadro Capital, an investment firm, that would have protected jobs and creditors. He said Ashley will “pick at a carcass” and plans “to the keep the brand and the stock and nothing much else”. However, sources close to 3i insist it had played no role in the selection of the buyer and that the sale process had been taken over by AlixPartners on behalf of Barclays after the failure to attract new investment into Agent Provocateur.
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