Buyers express interest in PAS Group

The administrators of failed fashion retailer PAS Group have received expressions of interest from about 30 parties.

PAS Group owns a portfolio of fashion brands including Black Pepper.

The administrators of failed fashion retailer PAS Group have received expressions of interest from about 30 parties keen on restructuring parts or all of the fashion chain, with non-binding indicative offers due by June 30 and binding offers to be lodged in the second half of July.

At an update to creditors last week by PwC partners Stephen Longley, David McEvoy and Martin Ford as voluntary administrators, the meeting was provided with an update on the interest from outside parties to save the business as well as early investigations into the collapse of PAS Group late last month.

The administrators remain confident that, despite the economic downturn caused by the coronavirus pandemic, PAS can be restructured, and with the help of fresh equity and renegotiated deals with landlords can emerge from voluntary administration as a successful retail chain.

The creditors’ meeting was told there were 30 parties that lodged an expression of interest in parts or all of the PAS retail business, mostly from domestic companies, with the bulk of the interest in either buying PAS as a whole or picking off its contract design and manufacturing arm Designworks.

Designworks is proving especially popular and could be the prized asset in the PAS collapse with its strong portfolio of licenced brands such as Star Wars, Marvel, Disney, Everlast and Slazenger, as well as expertise in supplying fashion and apparel.

It is believed that PAS’s two biggest shareholders — US investment bank Coliseum Capital Management, with a 65 per cent stake, and entrepreneur Larry Kestelman, with 10.5 per cent — will also be approached to discover their interest in buying the business.

PAS Group became the latest retailer to lurch into voluntary administration in what has been a disastrous ride for the wider retail sector in the past few years, during which a large number of chains have collapsed.

The ASX-listed PAS Group owns a portfolio of fashion brands including Black Pepper, Review and Yarra Trail, and has been struggling for years.

The failed company’s biggest secured creditors are Commonwealth Bank and a specialist ­financier called MoneyTech Australia.

The board of PAS Group had investigated several options to resurrect the retailer’s performance before they put it into voluntary administration.

After coming to the conclusion that it needed $10m-$20m in fresh equity or loans to build a pathway to recovery, and the markets and investors potentially unwilling to extend them these funds, it was decided it was best to place the business into the hands of administrators.

At the time of its collapse, PAS Group chief executive Eric Morris said the decision was difficult but made with the interests of the group, shareholders and employees in mind. “The Australian retail sector was already facing significant challenges prior to the COVID-19 pandemic,” Mr Morris said in May.

It is hoped the new owners of a restructured PAS Group will be able to negotiate better lease deals with landlords.