Frasers Group hits out at the rescue of Peacocks
Frasers Group has hit out at yesterday's news of a rescue of value fashion chain Peacocks by a consortium of international investors led by its former COO Steve Simpson, saying its was effectively frozen out of the sale process despite submitting an expression interest.
Peacocks had been part of Philip Day's Edinburgh Woollen Mill Group and collapsed into administration last year. Yesterday a rescue deal securing 200 stores (the group had entered the pandemic with 400) was announced which was backed by a consortium of investors, based in Dubai, where Day lives.
Day was the biggest creditor of Peacocks and is owed money by the business however administrators FRP negotiated a deal with him by signing a deferred loan agreement between the investors and the retail tycoon, which will eventually see him get his money out of the company. Day will, however, not be in charge of the business.
A similar deal was set in place with the EWM and Bonmarche brands, while Day’s other brand, Jaeger, was sold to Marks & Spencer, where it will become an online-only business. The deal essentially sees the EWM brands – excluding Jaeger – reform under the old management led by Simpson.
Unsecured creditors, including landlords, suppliers and the taxman, will lose out and are unlikely to get their money back.
Frasers has claimed that FRP was unwilling to "engage substantively or to provide key financial information" to enable it to progress its bid.
In a statement to the London Stock Exchange this morning, it said: "Frasers Group with its advisors actively participated in discussions with FRP Advisory and representatives of the secured creditor, The Edinburgh Woollen Mill (Group) Limited. However, at no point in the discussions were the secured creditor or the Joint Administrators prepared to allow Frasers Group the same access to key stakeholders and information as the purported purchaser was allowed.
"The actions of the secured creditor and the Joint Administrators made it virtually impossible for Frasers Group or any other third party to provide a credible alternative to the purported sale to the connected party.
"Since November, Frasers Group has repeatedly expressed its concerns in relation to the process. On March 27, advisors to Frasers Group sent a letter to FRP Advisory detailing those concerns which included insufficient access to: basic financial information; management information and projections; property details, stock information; retention of title stock and intellectual property. The letter noted that the All-Party Parliamentary Group is looking at the insolvency profession and stated that Frasers Group will fully assist by setting out its experience and concerns.
"Throughout the process Frasers Group raised questions specifically around the rationale and information provided in relation to the assignment of Peacocks intellectual property to a third party in the early part of 2020 prior to the Joint Administrators being appointed. Evidence was provided to the Joint Administrators that undermined the authenticity of the assignment documentation provided to support the assignment which we strongly believe warrants further investigation by the Joint Administrators.
"Details of the so-called 'rescue' have not been made public, but the media reports suggest that the consideration was in the form of a deferred loan agreement which we believe would require the involvement and approval of Philip Day."