FRP-led M&A deal for high street fashion chain

Background

Monsoon Accessorize Ltd – (now M Realisations 2020 Ltd) – is a UK-based chain of retail stores incorporated in 1973, offering womenswear, children’s clothing and homeware gifts under the Monsoon brand. Accessorize Ltd (now A Realisations 2020 Ltd) initially traded through the Monsoon stores and opened its first standalone outlet in Covent Garden in 1984.

Company voluntary arrangements (CVA) were approved for both companies in 2019, but in March 2020 the already challenging retail sector was heavily impacted by COVID-19 lockdown measures, leaving the companies with no option but to close all retail stores and furlough the associated staff, together with a number of head office staff. The companies continued to incur substantial costs associated with the retail estate while only able to secure sales online.

Action

FRP’s Restructuring Advisory team worked with the companies to assess the short-term cashflow requirements whilst liaising with funders, and assisting the director in preparing a sales memorandum and supporting information to market the business to potential purchasers. Over a three-week period, the team identified and approached potential interested parties with a view of selling the business and assets as a going concern. They also prepared a contingency plan in the event that a sale would not be possible.

The team dealt with all matters in connection with statutory obligations, provided advice on other relevant matters, and undertook all work necessary to prepare the companies for entering into administration should a sale as a going concern not be achieved. Following an extensive special situations M&A process, FRP was appointed as Joint Administrators of the companies.

Outcome

Following the M&A process, a buyer was identified and the purchase of the business and assets was completed though a credit bid of £8.5 million. Following completion, 35 Monsoon Accessorize stores were closed; however, 156 stores were taken over under an option arrangement which enabled the buyer to occupy those stores under licence, while negotiating new terms with the landlords. This reduced the number of store closures and ensured that approximately 2,000 staff were retained.