Seafolly heading back to private equity with L Catterton

Private equity group L Catterton looks again to be destined to own the Seafolly swimwear label. Photo: Supplied

Seafolly’s earlier owner, L Catterton, appears set to take back control of the business, with KordaMentha announcing it as the preferred bidder following a sales process.

It comes after the swimwear brand, which was purchased by the Louis Vuitton-backed Asian private equity firm through a series of transactions between 2014 and 2018, fell into voluntary administration on June 29.

Administrators Scott Langdon and Rahul Goyal, of KordaMentha, said the private equity firm’s offer was the preferred because it provided the best return to all creditors including its suppliers.

“I was overwhelmed by the level of interest and competition to own one of Australia’s most recognisable brands,” Mr Langdon said.

“Seafolly will continue to be the iconic Australian beachwear brand that customers know and love.”

Mr Langdon said that customer gift cards and reward points would be honoured.

The preferred bid is through a Deed of Company Arrangement (DOCA) and details of the proposed DOCA will be sent to creditors Monday evening.

Creditors will be asked to vote on the DOCA at the next meeting which is being held next Monday (3 August 2020).

L Catterton (or its related parties) would not share any of the return to creditors, even though it is Seafolly’s largest creditor, Mr Langdon said, increasing the return to other creditors.

By early this year, Seafolly had over 40 stores in Australia and its swimwear was stocked in 2,700 stores in 41 countries.

Sales were $112 million in the 12 months to December last year.

The administrators have slashed costs by closing 15 Sunburn stores, renegotiating ongoing leases and changing the terms of key agreements.

Head office costs were also reduced, and administrators have provided purchase orders to key suppliers for the production of new inventory through to March 2021.

More than 80 investors, private equity firms and other companies were interested in buying the business and 15 formal expressions of interest were lodged.

The Administrators selected four final bidders in the last stage of the competition, but L Catterton was selected as the preferred bidder over the weekend.

The Seafolly network of 20 stores will remain open and more than 110 employees will retain their jobs.