Pas Group administrator PwC rebuffs offers for Designworks unit

Pas Group owns a raft of high-profile fashion brands.

Pas Group’s voluntary administrator, PwC, is believed to have rebuffed offers from parties for the most lucrative part of the business, Designworks, as it gets ready to launch a sales process this month.

Pas Group, which owns a raft of high-profile fashion brands such as Review Clothing, Jets, Black Pepper and Yarra Trail, was placed into voluntary administration on Friday, with Stephen Longley, David McEvoy and Martin Ford appointed as voluntary administrators.

It is understood the plan is to find a buyer for all of the business, rather than embark on a break-up, with fears that finding buyers for other parts of the business could be tricky if the most lucrative arm is hived off.

Advertising for a sale will be launched later this week before PwC calls for bids for the business around the end of the month.

Designworks is a designer, supplier and marketer of owned, licensed and private label products, operating under categories such as apparel, footwear and equipment.

Its customers include companies such as Target and Kmart, Myer, David Jones and Big W.

For the 2019 financial year, it generated $118m of sales for the group that posted an overall $1.8m annual net profit and generated $272.6m of sales.

Expectations are that the earnings from that part of the business will grow even more in the years ahead as struggling retailers look to outsource more of their design functions to drive down costs.

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A data room is in the process of being set up. Groups that may be interested in the Pas fashion brands are parties such as Mosaic Brands, which owns Noni B, and Harris Scarfe owner Spotlight.

When it was placed into administration on Friday, the company said it was solvent but felt that administration was the best way to affect change while protecting all stakeholders, given the unfavourable market conditions resulting from the coronavirus crisis.

The company is largely owned by private equity firm Coliseum Capital, based in Connecticut, that was co-founded by Adam Gray, who is the chairman of Australian traffic technology company Redflex.

The private equity firm has made efforts to bulk up the business with further acquisitions, at one stage looking at retail fashion group Sussan, so that it could stage an exit.

There were suggestions that it made efforts to embark on an equity raising before its collapse, but Pas could not get shareholder support.

Coliseum owns a 65 per cent interest in Pas after it launched a takeover bid for the fashion retailer in 2015.

At that time, Coliseum was offering $86m for the retailer, or 63c a share, but the offer was rejected, with major shareholder Larry Kestelman, who founded internet company Dodo and owned the Melbourne United basketball team, blocking the bid.

Its share price has been languishing for some time, with its market value at about $18m in the second half of last year.