Struggling Superdry to sell off part of business for £40m
Struggling fashion brand Superdry has struck a deal which will see it raise £30m towards clearing its debts.
The Gloucestershire company has sold the rights to its brand in India, Sri Lanka and Bangladesh for £40m.
The move follows a similar deal which saw the rights to the Superdry brand in South Korea sold off for a similar amount.
The company which was founded by Julian Dunkerton has been in serious trouble following a slump in sales and issues with its wholesale business.
Dunkerton has invested part of his personal fortune in the beleaguered business and a cost-cutting programme has been put in place which will include the closure of some of its stores.
Superdry has signed an IP joint venture agreement with Reliance Brands Holding UK and agreed the sale of its intellectual property assets in South Asia.
RBUK and Superdry will own 76 per cent and 24 per cent of the joint venture vehicle respectively.
RBUK is held by Reliance Retail Ventures Limited through its subsidiary Reliance Brands Limited (“RBL”), Superdry’s franchise partner in India since 2012.
The sale is estimated to result in Superdry receiving gross cash proceeds of £30.4m before tax.
Following the Transaction, RBL will continue to oversee brand operations in the territories.
RBL operates over 18,000 stores across India over 50 different luxury fashion brands with a presence in 7,000 towns and a total shopping area of more than 65 million square feet.
Superdry will invest £9.6 million in the joint venture entity, which shall be set off against the £40m deal.
The transaction, which has been approved by the Superdry board, is conditional upon approval from shareholders and lenders.
Superdry says that the partnership with Reliance will provide the best opportunities for the future growth of the Superdry brand in the region.
Once the deal is completed Superdry expects to receive total proceeds of approximately £28.3m. which will be used to increase the strength of the company’s balance sheet, boost liquidity, and fund its ongoing working capital requirements as part of its turnaround plan.
