Axios Pro Exclusive Content

Farfetch noteholders take issue with "expedited" sale to Coupang

A photo of someone holding a phone displaying the FarFetch logo

Photo: Rafael Henrique/SOPA Images/LightRocket via Getty Images

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.

Go deeper