03 Apr ‘Investors in dark’ over bid to carve up Katies, Rivers owner
Private equity giant Anchorage Capital Partners has lobbed a $100 million bid to carve up troubled retailer Specialty Fashion Group, but one investor says shareholders have no way of knowing if it is a good deal or not.
The company behind the Millers, Katies and Rivers chains has until Friday to decide whether or not to accept Anchorage’s cash offer for the City Chic and Autograph brands.
The two plus-size brands are seen as the diamonds in the rough of Specialty Fashion’s business, which has run up heavy losses in recent years and is in the process of closing about 300 of its 1000 stores across Australia.
But Specialty Fashion, which is running a review on the future of its business and has received interest from other suitors, warned it may not have time to decide on Anchorage’s offer.
“There are a range of outstanding issues that are yet to be agreed with Anchorage and the offer is subject to a number of conditions,” the company said in a statement on Tuesday.
“Given this, the [independent review committee] does not believe that agreement will be reached within the required time-frame within the offer.”
A spokeswoman for Specialty Fashion could not say what the “outstanding issues” and conditions were.
Sandon Capital managing director Gabriel Radzyminski, whose fund owns about 3 per cent of Specialty Fashion, said shareholders could not assess Anchorage’s offer properly because the company did not report earnings from each of its brands separately.
“Without the benefit of divisional earnings breakdown it’s very hard to put the announcement into context,” Mr Radzyminski said.
“Irrespective of whether this is a good price or not, it clearly demonstrates there is value within Specialty Fashion.”
Sandon believes Specialty Fashion’s fortunes can be revived and has been calling for a capital raising to secure its balance sheet rather than a sale at a knock-down price.
Specialty Fashion said it had received a number of other confidential, non-binding offers for both the entire group and for some of its chains.
One of those offers is from a consortium that includes former chief executive Gary Perlstein, who announced his resignation in November when the company discovered he was working on a takeover offer.
Other offers are reportedly from fellow retailer Noni B, and the private equity firms Crescent Capital and Allegro.
Despite Specialty Fashion talking the deal down on Tuesday, news of the offer put a rocket under the group’s shares, which closed up 22.5 per cent at 43¢.
Shares have been in the doldrums amid falling sales and profit, tumbling from highs of $1.23 in early 2013 to as low as 11¢ in December. But talk of a takeover has breathed life into the stock.
Anchorage’s $100 million offer for City Chic and Autograph is higher than Specialty Fashion’s $68.2 million market value at the close of trading last week.
Specialty Fashion on Tuesday said it was considering “all options to improve shareholder value” which included selling all or part of its portfolio, and undergoing a capital raising.
“Shareholders should note that there is no certainty that any proposal will result in a binding transaction,” the company said.
Cotton On founder Nigel Austin’s private company NAAR is Specialty Fashion’s biggest shareholder with 20.2 per cent of the group’s stock. Mr Perlstein owns 9.3 per cent and co-founder Ian Miller holds 8.7 per cent.
Specialty Fashion has been in play for over a year, with Al Alfia Holdings – the Qatari Royal Family-controlled group which owns the iconic London department store Harrods – making a $135 million bid in February 2017 at 70¢ a share.
That deal collapsed because of probate issues caused by the death of Sheikh Khalifa bin Hamad al-Thani, the father of Al Alfia’s sole shareholder.
Specialty Fashion ran at an after-tax loss of $8.8 million last year, a $2.1 million loss in 2016 and a $4.4 million loss in 2015.
It appointed former Myer deputy CEO Daniel Bracken as its CEO in February.
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Author: Patrick Hatch
Published: April 3, 2018
Source: The Sydney Morning Herald