Seafolly administrators buy out competitor Jets swimwear

Seafolly’s administrators have bought out struggling rival Jets after its parent company went into administration earlier this year.

Administrators Scott Langdon and Rahul Goyal announced that the purchase of the competitor had been finalised over the weekend.

“It makes a lot of sense to bring Jets into the Seafolly group because the two businesses serve different market segments in the fashion swim category,” Mr Langdon said.

“The combination presents clear and material synergies around design, wholesale and supply chain.”

Jets is part of the PAS Group, which owns major brands including Review, Black Pepper, Yarra Trail and Designworks.

It entered administration in May, and Jets and other brands within the group were put on the market soon after the news broke.

At the time, chief executive Eric Morris said the difficult decision had been made with the long-term interests of the Group, shareholders and employees in mind and followed an announcement in April that the company was looking into restructuring options.

“The Australian retail sector was already facing significant challenges prior to the COVID-19 pandemic,” Mr Morris said.

Mr Langdon said negotiations began while the Seafolly administrators were conducting a sale process for the Seafolly Group.

“All interested parties who signed confidentiality agreements in the final stages of the Seafolly process agreed that the Jets purchase would make Seafolly a stronger business,” he said.

“This in turn provided more competitive tension and a better return for Seafolly creditors than would have been the case.

“The Jets purchase will be funded with new money.”

For now, the Jets arm of the business will mainly be a wholesale and e-commerce offering.

The acquisition comes just one week after Seafolly creditors voted to accept a Deed of Company Arrangement (DOCA) that will save the business.

When executed, the DOCA returns Seafolly to its previous owners.

PAS administrator Stephen Longley said the sale was a great opportunity for both major Australian swimwear brands currently under administration.

“The strategic consolidation of Jets and Seafolly, two of Australia’s leading swimwear brands, will best place the labels to flourish in coming months as the national economy continues to reopen,” he said.

Proceeds of the sale will be used to cover claims from employees and the voluntary administrators’ trading costs, then to satisfy a portion of the claims by the sole secured finance creditor of Jets Swimwear Pty Ltd.

The administrators are still pursuing the sale of the broader PAS Group, with a second creditors meeting scheduled for August 17.

Meanwhile, Seafolly has also faced a tumultuous year.

The iconic brand was saved late last month barely a month after going into administration, with its former owners taking the reins again.

Administrators Scott Langdon and Rahul Goyal announced they had chosen private equity business L Catterton as the preferred bidder, beating out dozens of others.

Mr Langdon said he was “overwhelmed by the level of interest and competition”, but the administrators had ultimately decided L Catterton could provide the best return to creditors.

The company is Seafolly’s largest creditor, owed more than $25 million, but offered to forgo any return in favour of a higher return to the business’ other creditors.