SYDNEY — LVMH-backed private equity firm L Catterton is set to reacquire Australian swimwear brand Seafolly after the Sydney-based company entered voluntary administration on June 29, citing the “crippling financial impact” of the Australian bushfires and the coronavirus pandemic.
In a statement released Monday, Sydney-based administrators Korda Mentha announced that L Catterton has been chosen as the preferred bidder for the brand, representing the best offer to all creditors, including suppliers. The deal is subject to creditor approval at a meeting on Aug. 3.
According to a source close to the process, Seafolly’s debt is approximately 63 million Australian dollars or $45 million, of which 50 million Australian dollars or $36 million is unsecured. L Catterton is the largest creditor, owed 27 million Australian dollars or $19 million.
Korda Mentha reports there were more than 80 parties interested in the brand, approximately 25 percent internationally based. Thirteen lodged formal expressions of interest, with the administrators narrowing these down to a shortlist of four names, half Australian and half international.
“I was overwhelmed by the level of interest and competition to own one of Australia’s most recognizable brands” said administrator Scott Langdon. “With an optimized retail, online and wholesale network, Seafolly will continue to be the iconic Australian beachwear brand that customers know and love.”
By early this year, Seafolly had more than 40 stores in Australia and its swimwear was stocked in 2,700 stores in 41 countries. According to Korda Mentha sales were 112 million Australian dollars or $80 million in the 12 months to December last year.
Earlier this month Korda Mentha announced it would close 15 of Seafolly Group’s multibrand Sunburn swimwear stores in Australia, in order to prepare the business for sale. Administrators also renegotiated ongoing leases, reduced head-office costs and provided purchase orders to key suppliers for the production of new inventory through to March 2021.
Twenty Seafolly stores in Australia remain open, with more than 110 employees retaining their jobs. There are no plans at this stage to close any of the 12 international Seafolly stores in the U.S., Singapore, New Zealand and Europe.
Founded by Peter and Yvonne Halas in 1975, Seafolly went on to become Australia’s leading swimwear manufacturer. In December 2014 L Catterton acquired a 70 percent stake in the company, for a reported 70 million Australian dollars. At the time, according to former Seafolly chief executive officer Anthony Halas, Seafolly had a more than 30 percent local market share and 110 million Australian dollars in group sales for fiscal 2014 — or $104 million at average fiscal 2014 exchange — up 17 percent on 2013.
Following its acquisition of Columbian swimwear brand Maaji in April 2017, L Catterton announced plans to merge Maaji with Seafolly to create a global beach lifestyle retail platform generating $500 million in sales within five years. L Catterton reported at the time that there were plans to open at least 150 new global stores for Seafolly, Maaji and Sunburn, boost wholesale stockists and expand categories such as activewear and children’s wear.
According to L Catterton Asia chairman and managing partner Ravi Thakran in April 2017, the brands had generated annual sales of 190 million Australian dollars, or $141 million, in 2016 — with Seafolly accounting for roughly 125 million Australian dollars of that — and earnings of 26 million Australian dollars, or $19 million at average exchange for the period.
In 2018 L Catterton increased its stake in Seafolly to 100 percent.
Seafolly’s administration followed three months after that of rival Australian swimwear brand Tigerlily, which was acquired by Sydney-based private equity firm Crescent Capital Partners from Billabong in February 2017 for $46million. Tigerlily has since been returned to Crescent Capital.