A group of Farfetch's creditors, introduced as Custom group Which it claims represents more than 50% of the company's liabilities due in 2027, wants to try to stop the Korean acquisition of Coupang announced on December 18. In a statement issued on Friday, in which creditors were not identified, it was said that as a first step, a default is being declared (shortening) of obligations “such that they must be paid immediately.”
He explained that the non-compliance resulted from the suspension of trading and the withdrawal of Farfetch shares from the New York Stock Exchange, due to the purchase offer submitted by Coupang. Last December, the luxury e-commerce company warned that the company's investors – including many employees whose bonuses were paid in the form of shares – would not be able to recover the amounts invested.
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The group is said to have appointed legal advice firm Pallas Partners and investment bank Ducera Partners to “urgently evaluate options to protect their interests in the face of the value destruction they believe will occur due to the sale proceedings to Coupang”. It is possible to read.
The creditor group says it did 'Serious concerns' On how Farfetch went from being “more than $800 million” liquid in August 2023 to selling in distress four months later. It is also reported that, by analyst consensus, “Farfetch is estimated to be valued at more than $3 billion.” The sale to Coupang provides for a loan of $500 million as well as the transfer of all assets of the José Neves company, including New Guards Group and Stadium Goods, into the hands of the South Korean company.
Given this scenario, the creditor group says it is “deeply concerned about the rapid and unjustified deterioration of Farfetch’s financial position between August and December 2023.”
With the agreement signed between Farfetch and Coupang, the creditors see that there is a “risk of making it impossible for any other offer to emerge with a proposal” that could bring more value.
In the same statement, the group said that “there appears to have been no transparency or governance in this process, which has allegedly left many of Farfetch’s luxury retail partners uncomfortable and considering severing ties.”
“The group believes this lawsuit sets an extremely dangerous precedent,” says a spokesperson for the group. “Allowing this transaction to complete fails to maximize the value of the company’s assets, while at least three other credible parties have been reported to be interested in all parts of the deal,” the statement said. The group says it is urgently considering next steps.
At the beginning of January, Farfetch CEO Bom Kim sent an email to employees expressing confidence that the purchase could be completed by the end of this month. The Observer contacted Farfetch to try to obtain a reaction to the group’s statement, but to no avail until this article was published.
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