Seafolly swoops on rival days after rescue deal approved

L Catterton is a partnership between global luxury goods company LVMH, LVMH's major shareholder Groupe Arnault and US private equity firm Catterton. It acquired a 70 per cent stake in Seafolly in 2014 from the founding Halas family and bought out the remaining shares two years ago.

"L Catterton and LVMH have not acted in a manner that is reflective of the tradition and heritage of a luxury conglomerate," said one small supplier, who asked not to be named.

Seafolly administrators Scott Langdon and Rahul Goyal of KordaMentha said negotiations to buy JETS began during the Seafolly sale process and potential bidders were aware of the deal, which is expected to be completed on Monday.

“All interested parties who signed confidentiality agreements in the final stages of the Seafolly process agreed that the JETS purchase would make Seafolly a stronger business," Mr Langdon said.

"This in turn provided more competitive tension and a better return for Seafolly creditors than would have been the case."

“It makes a lot of sense to bring JETS into the Seafolly group because the two businesses serve different market segments in the fashion swim category. The combination presents clear and material synergies around design, wholesale and supply chain.”

Under Seafolly, the JETS business would be mainly a wholesale and e-commerce offering for the time being. JETS is sold in department stores such as David Jones and online retailers such as The Iconic. The acquisition included JETS inventory and intellectual property and about seven JETS staff will transfer to Seafolly.

The JETS acquisition was announced a week after creditors overwhelmingly voted in favour of a deed of company arrangement proposed by L Catterton.

Under the DOCA, which was recommended by the administrators because it offered the best return to creditors, creditors were divided into three pools depending on their continuing importance to Seafolly.

Pool A creditors – those deemed critical to its future – would receive 100¢ in the dollar; pool B creditors – deemed important to its future – would receive 50¢ in the dollar; and pool C creditors – those considered non-essential or unlikely to continue to trade with the company – would receive 3¢ in the dollar.

PAS Group said net proceeds from the sale of JETS would be used to pay priority claims from employees, the voluntary administrators’ trading costs, and satisfying a portion of the claim by the sole secured finance creditor of JETS.

The administrators – PwC partners Stephen Longley, David McEvoy, and Martin Ford – are still seeking buyers for the rest of the PAS Group, which owns Review, Black Pepper and Designworks. The second creditors meeting will be held on August 17.