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Agent Provocateur sale to Sports Direct is a ‘preposterous disgrace to British business', says lingerie brand’s founder
Business
became unviable after identifying ‘material misstatements’ in
its accounts over a number of years that the company’s board,
auditors and owners had failed to notice
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The
sale of Agent Provocateur by private equity firm 3i to a company
part-owned by Sports Direct owner Mike Ashley is “preposterous” and “a
disgrace”, the lingerie brand’s founder has reportedly said.
Joe Corré, son of Vivienne Westwood and former Sex Pistols manager Malcolm McLaren, who founded the chain in 1994 told The Guardian:
“The pre-pack arrangement between 3i and Mike Ashley’s Sports Direct is
a disgrace to British business up there with Sir Philip Green’s
shocking behaviour over BHS.
“If this preposterous deal goes ahead with Mike Ashley,
3i and their partners are going to face a phenomenal swath of
litigation actions. 3i’s reputation is going to be left in tatters. I
don’t think they will ever recover from this. This is a phenomenal
stitch-up.
“Just
how 3i have decided the right business model is to deliberately road
crash the business to wipe out anything owed to creditors or the taxman
is quite unbelievable, when a higher offer on the table avoids them
taking such action. This is bad practice at its worst.”
Agent
Provocateur was sold by consultants Alix Partners through a
controversial “pre-pack” deal to Four Holdings, which Mike Ashley
part-owns. The structure of the deal means Four Holdings can agree to
the sale of the assets before buying the business and putting it into
administration.
This
means the administrator can sell the assets immediately, without
consulting the unsecured creditors, who are likely to lose most of their
money.
In order to pursue a pre-pack, directors must first show
that they have exhausted all other options for a sale and the
possibility of keeping the business running as a going concern.
A
spokesperson for 3i, which bought Agent Provocateur in 2007, said last
year it identified “material misstatements” in the company’s accounts
over a number of years that the company’s Board, auditors and 3i as
owners, had failed to notice.
“It
became clear that the business was not sustainable in its current form
and the Board appointed Rothschild to seek new investment for the
business to allow it to continue as a going concern. Given the scale of
the issues this was not possible,” the spokesperson said, adding that 3i
had no role in choosing the buyer and does not expect to recover any
money from the sale.
The move from Mr Ashley is the latest of his efforts to move from Sports Direct’s
pile-it-high, sell-it-cheap model. Earlier this month the company
bought an 11 per cent stake in struggling fashion chain French
Connection.
Business news: In pictures
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Mr
Corré and his then-wife Serena Rees founded Agent Provocateur in 1994
in Soho’s Broadwick Street, when the area was known for sex shops and
prostitution.
Its
stated aim was “stimulating, enchanting and arousing” wearers, and it
immediately whipped up a media frenzy in a Britain still prudish about
sex.
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