Superdry plc (SDRY) Superdry plc: DIS-Disposal 22-March-2023 /
07:00 GMT/BST
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SuperdryPlc
("Superdry" or "the Company")
22 March 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF REGULATION (EU) NO. 596/2014, WHICH FORMS PART OF
UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.
Superdry brand to expand reach in APAC region following IP
agreement.
Superdry is pleased to announce that it has signed an IP
Transfer Agreement (the "Agreement") with Cowell Fashion Company
Ltd ("Cowell"), a listed company based in South Korea, for the sale
of Superdry's intellectual property ("IP") assets in certain
countries within the Asia Pacific ("APAC") region (the "Disposal"
or "Sale"), for an upfront fee of USD50 million USD, payable in
cash.
Cowell is an experienced local operator within the APAC region
and has been listed on the South Korean stock exchange since April
2015. Cowell's operations focus on licensing and manufacturing
apparel products for established global brands across product areas
including underwear, sportswear, and accessories, and they are
ideally positioned to appreciate and maximise Superdry's potential
across the region.
The Agreement means Cowell will own and use the Superdry brand
in key APAC markets, starting with its home market of South Korea
and extending to others including China, with Superdry and Cowell
working together to develop products relevant for those
markets.
Superdry plans to build a collaborative partnership with Cowell,
capitalising on the shift in consumer preferences in Asia towards
lifestyle product, by working with Cowell to design and develop
market-relevant product which remains consistent with the Superdry
brand heritage.
Superdry will provide certain support and know-how relating to
the Superdry brand to Cowell during the first two years following
completion of the Sale. In consideration for these services, an
additional management fee of USD1.0 million USD, comprising two
payments of USD500,000 USD each, is also payable, in cash, directly
to Superdry, with the first instalment being payable on completion
and the second instalment being payable on the first anniversary of
completion.
Speaking today about the Agreement with Cowell, Julian
Dunkerton, Superdry's Chief Executive Officer and Founder,
said:
"This agreement offers the Superdry brand a fantastic
opportunity to expand its global reach, whilst providing additional
funding to help deliver our turnaround programme in the face of the
challenging consumer landscape. I'm absolutely thrilled by the
opportunity to work together with Cowell to create inspiring
products consistent with our brand heritage and build out across
the APAC market."
Cowell Fashion Chairman Lee Sun-seop stated his aspirations
earlier today: "The collaboration between Cowell Fashion, which has
state of the art planning, design, and production know-how, and
Superdry PLC, which has a long history of innovation and brand
power, can be said to be the beginning of a paradigm shift in the
Korean fashion industry. With the two companies aligned together
through explosive synergy, the plan to grow Superdry into a
Superbrand across Asia is an exciting proposition as long term
partners."
Nature of the transaction
The Agreement comprises the assignment of all of Superdry's IP
assets in the APAC region, but excludes India, Bangladesh,
Pakistan, Sri Lanka, Australia and New Zealand where Superdry will
retain its IP rights. Superdry will also retain all its IP rights
outside of the APAC region. The Disposal constitutes the permanent
transfer of the relevant IP assets, subject to Superdry having a
right of first refusal to buy back the IP assets if Cowell wishes
to sell or otherwise dispose of any such IP, or if Cowell wishes to
allow any IP registrations to lapse. The Agreement includes
provisions to support long-term collaboration between the parties
including terms relating to: the ownership and use of new designs;
Superdry facilitating introductions for Cowell to third parties in
the APAC region; both parties' engagement in meetings to facilitate
cooperation between their respective creative and production teams;
Cowell's compliance with Superdry brand guidelines; the inclusion
of restrictive covenants which are customary in IP 'co-existence'
arrangements; and the maintenance and enforcement of IP.
In addition, the Agreement includes provisions granting Superdry
a perpetual, irrevocable, and sub-licensable licence to enable
Superdry to continue manufacturing (or engaging third parties to
manufacture) goods in the APAC region. It will also allow Superdry
to fulfil its obligations and contracts with its existing
long-standing wholesale relationships in the region until their
expiry, enabling Cowell to focus its initial attention on
developing the Superdry brand and presence in its home market of
South Korea.
The Agreement contemplates the intention of Superdry and Cowell
to enter into an ancillary arrangement under which Superdry may
purchase, and Cowell may supply, certain finished products. Any
such arrangement is subject to both parties agreeing terms on
sustainability, quality and pricing and concluding a formal
manufacturing and supply agreement.
The Sale, which has been approved by the Superdry Board, is
conditional on: a. approval being obtained from Superdry's
shareholders; b. approval being obtained from Superdry's lender; c.
Superdry and Cowell concluding an escrow agreement for the payment
of the consideration into an escrowaccount pending completion of
the Disposal; and d. Cowell having deposited 90% of the
consideration (being USD45 million USD) into such escrow
account,
(collectively, the "Conditions Precedent").
Subject to the Conditions Precedent having been satisfied within
3 months following the date of the Agreement, with an option to
extend that period in certain limited circumstances, completion of
the Disposal will take place on the first business day following
satisfaction of the Conditions Precedent.
Background to and reasons for the Sale
Superdry believes that the partnership with Cowell will provide
the best opportunities for the future growth of the Superdry brand
in the APAC region and allows the Company to focus on growing its
brand and increasing sales in its more established territories
where it has strongest expertise.
Superdry previously announced its exit from the Chinese market,
following an amicable agreement with its former partner, which was
finalised in 2020 after material losses were incurred and has no
plans to re-enter the market itself in the foreseeable future.
Despite its continued presence in a number of APAC territories,
significant further investment would be required to rebuild the
Company's previous scale and volumes across the other territories
in the region, particularly in China, and the Company believes this
is more likely to be successfully delivered through a third-party
partner.
For the financial year to 30 April 2022, the IP assets subject
to the Disposal generated approximately 1.2% of total Group sales
and contributed revenue of GBP7.4 million and profit before tax of
approximately GBP2.5 million, excluding centralised costs
allocation. The carrying value of the gross assets that are
included in the Disposal is estimated to be GBPnil.
Application of the Sale proceeds
Following satisfaction of the Conditions Precedent, and on or
before the completion of the Sale, Superdry expects to receive
total proceeds of approximately GBP34m net of transaction costs and
taxation. The net proceeds from the Sale will be used to increase
the strength of the Company's balance sheet, boost liquidity, and
fund its ongoing working capital requirements, including the
implementation of a significant cost reduction programme. The
Company is also considering additional steps to further strengthen
its balance sheet in connection with its turnaround programme,
which is being delivered in a challenging market, which could
include a potential equity issue.
Class 1 Transaction
The Sale constitutes a Class 1 transaction for Superdry under
the Financial Conduct Authority's Listing Rules. Completion of the
Sale is therefore conditional on the approval of Superdry's
shareholders. Superdry intends to send a circular to its
shareholders and convene a general meeting for the purpose of
seeking the required approval, as soon as reasonably possible and
will make a further announcement when it does so. More details
regarding the Agreement will be contained in the circular that will
be sent to shareholders in due course.
Peel Hunt LLP and Liberum Capital Limited are acting as Joint
Sponsors to Superdry in connection with the transaction.
For further information
Superdry
Shaun Wills shaun.wills@superdry.com 44 (0) 1242 586747
Chris Birks investor.relations@superdry.com 44 (0) 1242
586747
Chris Macdonald
Joint Corporate Brokers and Joint Sponsors
Peel Hunt LLP
George Sellar 44 (0) 2074 188900
Mike Burke
Andrew Clark
Liberum Capital Limited
John Fishley 44 (0) 2031 002000
Edward Thomas
Media Enquiries
Tim Danaher superdry@brunswickgroup.com 44 (0) 207 4045959
The person responsible for arranging this announcement on behalf
of Superdry Plc is Shaun Wills, Chief Financial Officer.
Inside information
The information contained within this announcement is deemed by
Superdry Plc to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 (as it forms part of
domestic law by virtue of the European Union (Withdrawal) Act
2018). On publication of this announcement via a Regulatory
Information Service, this inside information is now considered to
be in the public domain.
Important Notices
Each of Peel Hunt LLP and Liberum Capital Limited (together, the
"Joint Sponsors") is authorised and regulated in the United Kingdom
by the Financial Conduct Authority. Each of
the Joint Sponsors is acting exclusively for Superdry as sponsor
and for no one else in connection with the Disposal, and will not
be responsible to anyone other than Superdry for providing the
protections afforded to the respective clients of the Joint
Sponsors or for providing advice in relation to the Disposal, the
contents of this announcement or any transaction, arrangement or
other matter referred to in this announcement.
This announcement has been issued by, and is the sole
responsibility of, Superdry Plc. None of the Joint Sponsors or any
of their respective affiliates accepts any responsibility
whatsoever for the contents of this announcement, including its
accuracy, completeness and verification or for any other statement
made or purported to be made by it or on its behalf in connection
with the Company or the Disposal. No representation or warranty,
express or implied, is made by the Joint Sponsors as to the
accuracy, completeness or verification of the information set forth
in this announcement and nothing in this announcement is or shall
be relied upon as a promise or representation in this respect,
whether as to the past or the future. Accordingly, save for the
responsibility of the Joint Sponsors under the Financial Services
and Markets Act 2000 (as amended), each of the Joint Sponsors and
their respective affiliates disclaim, to the fullest extent
permitted by applicable law, all and any liability whether arising
in tort, contract or otherwise which they might otherwise be found
to have in respect of this announcement or any such statement.
No statement in this announcement is intended to be a profit
forecast or estimate for any period.
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Dissemination of a Regulatory Announcement that contains inside
information in accordance with the Market Abuse Regulation (MAR),
transmitted by EQS Group. The issuer is solely responsible for the
content of this announcement.
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ISIN: GB00B60BD277
Category Code: DIS
TIDM: SDRY
LEI Code: 213800GAQMT2WL7BW361
Sequence No.: 231543
EQS News ID: 1588677
End of Announcement EQS News Service
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