Farfetch noteholders take issue with "expedited" sale to Coupang
A group of Farfetch's noteholders said it is weighing litigation after the sale of the troubled online luxury retailer closed Wednesday morning.
Why it matters: Though closed, we may not have heard the last of this deal.
What's happening: The noteholders, known as the 2027 Ad Hoc Group, claim Farfetch and Coupang (NYSE: CPNG) "forced through [a] rushed pre-pack sale."
- "It provides further evidence of [a] lack of protection of value for all stakeholders."
Of note: The group, which holds over 50% of Farfetch's 3.75% convertible senior notes due 2027, was formed to explore options following the proposed acquisition by Coupang.
Details: The close of the sale removes the possibility of a consensual solution, per the group.
- It is also concerned about the "unexplained" rapid demise of Farfetch and characterized the financing terms as egregious.
- The group went on to note that Farfetch appeared to renege on its willingness to run a sale process through April.
Catch up fast: Farfetch agreed to a $500 million rescue by Coupang and Greenoaks, rather than accept a rival offer from Apollo Global Management.
- The luxury retailer also opted against being sold off for parts, including its stakes in Neiman Marcus and Off-White.
What they're saying: "The group believes the expedited sale of Farfetch to Coupang is yet another example of serious failings at Farfetch, including a lack of transparency and corporate governance at Farfetch."
- The sale process' speed and the bridge loan terms prevented thorough marketing of Farfetch's assets to maximize value, the group said.
- It also complained about Coupang's "below market value offer" and a poison pill put in place to prevent other parties from bidding.
The bottom line: Farfetch's assets like IP and customer data are more difficult to value when the company is bleeding money.
A Farfetch spokesperson told Axios via email that the deal was struck after a marketing period during which Farfetch sought and did not receive alternative proposals.
- Its focus will now be on turning the business around.
Coupang did not immediately respond to a request for comment.
Editor's note: This story has been updated with a comment from Farfetch.