Bendon Lingerie has been given a lifeline, after parent company Naked Brands Group divested from the brand.
The New-Zealand born lingerie label has been sold to its current chairman Justin Davis-Rice and CEO Anna Johnson for $1 New Zealand dollar.
The sale, which was approved by shareholders on 23 April, follows exhaustive efforts conducted in 2019 and 2020 to find an external buyer for both the Bendon business as a whole and its brands individually – both of which proved unsuccessful.
Bendon’s brands include Fayreform, Me by Bendon, Pleasure State, Lovable, Bendon, Hickory and Davenport.
It recently consolidated its presence to Australia and New Zealand, through 100+ retail doors, an eCommerce site and 59 company-owned Bendon retail and outlet stores.
It employs over 500 staff and is headquartered in Auckland, New Zealand.
The divestment deal effectively saves the brand from entering liquidation, the move of which was flagged as the second option if the divestment transaction was not approved by shareholders.
"If the Proposed Transaction was unsuccessful, the Board would remain committed to disposing of the Bendon business to cauterise exposure to future losses," Naked said in a statement.
"In this scenario, the Company would seek to exit the Bendon business through a liquidation.
"This is a multifaceted and complex process involving but not limited to settling all liabilities including staff and leases, disposal of inventory and sale of brands among other things," Naked said.
Naked's divestment from Bendon comes as the lingerie retailer haemorrhages money, with Naked reporting that since its listing in 2017, its major asset Bendon has accumulated operating losses of over US$56 million.
"The Independent Board Committee has determined that the best option was to dispose of Bendon," Naked added.
Through the deal, all intra group loans have been forgiven – relieving Bendon of a NZ$40.4 million debt to Naked.
The transaction also sees Naked provide Bendon with a five-year loan of NZ$7 million at an initial interest rate per annum of 5%.
Speaking on the divestment, Naked CEO Justin Davis-Rice said the business will now focus its energy on investing in eCommerce.
"On behalf of our board and management team, I would like to thank our shareholders for their continued support and their approval of the proposed divestiture that we believe will unlock tremendous shareholder value in the months to come.
"With available cash of $270 million, a clean balance sheet with no debt and a re-invigorated management team and board of directors, I could not be more excited to execute on our business strategy to ultimately drive revenue growth with positive free cash flow.
"Our Frederick's of Hollywood eCommerce business continues to perform, and we are currently evaluating several synergistic acquisition targets that could position Naked as a strong player in intimate apparel.
"In summary, the vote closes the chapter on the Company's underperforming brick-and-mortar business and now positions Naked for the next cycle of growth initiatives that we expect to reward shareholders in 2021 and beyond," he said.
The Bendon divestment transaction is set to be closed on or around April 30 2021.