A group of institutional investors in luxury fashion marketplace Farfetch has united to challenge the proposed acquisition of the company by South Korean e-commerce company Coupang.
Dubbed the 2027 Ad Hoc, the group raised concern over the rapid deterioration of Farfetch’s financial position and the terms of the transaction support agreement.
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The group holds more than 50% of Farfetch’s 3.75% convertible senior notes due in 2027.
The 2027 Ad Hoc Group, with assets under management exceeding $1tn, declared a default in the 2027 notes and is currently exploring options to protect its interests.
This default was triggered by the NYSE’s (New York Stock Exchange) suspension of trading and delisting of Farfetch, a consequence of the proposed Coupang acquisition.
The investors have now demanded immediate payment in full.
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By GlobalDataThe group also appointed Pallas Partners and Ducera Partners to advise on protective measures against the perceived value destruction of the sale.
The 2027 Ad Hoc also questioned Farfetch’s financial trajectory, which shifted from a projected year-end 2023 liquidity of more than $800m to a distressed sale within four months from August 2023.
The group is concerned about the terms of the transaction support agreement with Coupang, Greenoaks and others, signed on 18 December 2023.
According to the group, other alternatives – including a break-up sale of Farfetch’s assets – could yield better value than the proposed sale.
A 2027 Ad Hoc Group spokesperson said: “The group believes this process sets an incredibly dangerous precedent. Allowing this transaction to complete fails to maximise the value of the assets of the company, at a time when at least three other credible parties were publicly reported to be interested in all or parts of the business. The group is urgently considering appropriate next steps.”
