New SurfStitch owner Alceon Group lays out expansion plan

THE new owner for Burleigh-Heads based e-tailer SurfStitch has ambitious plans to help the embattled company get back on its feet.

Alceon Group will take ownership of Burleigh Heads-based SurfStitch.

THE new owner of Burleigh Heads-based e-tailer SurfStitch says it has no plans for a radical overhaul of the embattled company, which has been in administration for the past eight months.

On Wednesday, creditors approved a deed of company arrangement proposal from New Zealand retailer EziBuy.

Independent company director Abigail Cheadle’s proposal, backed by SurfStitch co-founder Lex Pedersen, failed to win the backing of creditors.

SurfStitch shares were suspended from the ASX in May last year, and the company fell into voluntary administration in August following a collapse in earnings and the launch of several class action lawsuits from shareholders.

Richard Facioni, executive director of EziBuy owner Alceon Group, yesterday said a heavy hand was not required.

“It is not a broken business, it is fundamentally a good business,” he said.

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“Unfortunately it has been caught up in this whole administration problem. And that has caused issues, such as uncertainty for staff, suppliers and customers.”

Mr Facioni said Alceon’s plan was to invest working capital and restore confidence in the business.

“So the business has got the right stock and the right amount of stock that it needs to trade, going forward. And also to invest a bit of promotion just to rebuild the brand name.”

He said SurfStitch would be set alongside EziBuy in a new Australian holding company, with combined annual turnover of up to $250 million. However, both companies would operate independently.

“The advantage is we have now got two online businesses, talking to different customers. But we will start to see some benefits in the back end through sourcing, logistics, through to IT and technology,” he said.

“But we want to run the two quite independently, at least initially. From a customer-facing perspective we want to keep the two very, very separate, because we don’t see any benefit in combining the two brands.”

Mr Facioni said there were also no plans to move SurfStitch’s headquarters from Burleigh Heads, nor to implement more redundancies.

“In fact, I think it’s the opposite. It needs investment. Staff have been through a number of restructurings as a result of the administration. So they have done that and they have sort of resized the business to where it is today. The reality is we want to grow the business. My guess, it will more than likely go the other way, and we will hire staff.” Under the EziBuy DOCA creditors will be paid a mixture of cash and equity in the new holding company for SurfStitch and EziBuy.

Shareholders and group member claimants (people involved in the class action lawsuits) will receive equity in the new company, which they will be able to monetise under a trade sale or stockmarket listing within three years.

Ms Cheadle said she was disappointed her proposal was unsuccessful.

“My proposal would have delivered a better outcome for the shareholders,” she said. “I hope SurfStitch does well under its new ownership.”