Lifeline thrown as SurfStitch gets a new owner

Lifeline thrown as SurfStitch gets a new owner

The fate of embattled surfwear chain SurfStitch Group (ASX: SRF) has been decided with the company now falling under the new ownership of online retailer EziBuy.

At a meeting of creditors today, two-thirds of votes were in favour of accepting EziBuy's deed of company arrangement (DOCA) proposal to absorb SurfStitch.

Ezibuy is an online New Zealand business which sells apparel and homewares.

SurfStitch administrators John Park, Quentin Olde and Joseph Hansell of FTI Consulting received a second DOCA proposal from Cheadle Group, however their opinion was the EziBuy proposal was superior and would result in a better return to creditors.

Cheadle Group's offer was conditional on settlement of class actions against SurfStitch and included swapping debt for equity for major creditors.

SurfStitch went into voluntary administration in August after the impact of a series of legal battles and class actions took their toll on the online retailer and ASX listed company.

The company downgraded its earnings three times, largely because of a dispute with surf technology group Coastalwatch and Crown Financial over the licencing deals which fell through, and this wiped around $20 million off revenues.

The company was reluctant to enlist administrators FTI Consulting and it still faces a $100 million class action filed on behalf of shareholders by Quinn Emanuel Urquhart & Sullivan.

SurfStitch entered the ASX as a market favourite in 2014, however its spectacular fall from grace wiped almost 93 per cent off its total market value.

SurfStitch's new owner EziBuy is a leader in the catalogue and apparel space, with more than 1.75 million orders a year made on its platform by customers across Australia and New Zealand.

Last year, EziBuy was acquired by Alceon Group whose other investments include a major shareholding in Noni B and a controlling interest in Cheap as Chips.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Enjoyed this article?

Don't miss out on the knowledge and insights to be gained from our daily news and features.

Subscribe today to unlock unlimited access to in-depth business coverage, expert analysis, and exclusive content across all devices.

Support independent journalism and stay informed with stories that matter to you.

Subscribe now and get 50% off your first year!

Four time-saving tips for automating your investment portfolio
Partner Content
In today's fast-paced investment landscape, time is a valuable commodity. Fortunately, w...
Etoro
Advertisement

Related Stories

Former AFL boss Gillon McLachlan to lead Tabcorp as new CEO

Former AFL boss Gillon McLachlan to lead Tabcorp as new CEO

After speculation was quashed that he would be joining Racing Victo...

Luxury fashion seller Azura hits profitability as AI plugs data gaps

Luxury fashion seller Azura hits profitability as AI plugs data gaps

An artificial intelligence (AI) overhaul has allowed Azura Fashion ...

“Not our desired outcome”: Telix withdraws from $300m Nasdaq IPO

“Not our desired outcome”: Telix withdraws from $300m Nasdaq IPO

Telix Pharmaceuticals (ASX: TLX), one of the nation’s largest...

CommBank joins new ‘intelligence loop’ to combat SMS phishing scams

CommBank joins new ‘intelligence loop’ to combat SMS phishing scams

In an effort to reduce the number of SMS phishing scam victims...