The Noteholder Group Initiates Measures to Contest Coupang’s Planned Acquisition of Farfetch

The 2027 Ad Hoc Group, formed today, is actively investigating options regarding Coupang’s proposed acquisition of the Farfetch business. Comprising institutional investors with assets under management exceeding $1 trillion, holding over 50% of Farfetch’s 3.75% Convertible Senior Notes due 2027, the Group has engaged Pallas Partners as its legal representative and Ducera Partners as financial advisors. Their urgent task is to assess strategies safeguarding their interests, anticipating potential value erosion if Coupang’s acquisition proceeds.

As a primary action, the Group has declared default on the 2027 Notes, triggering their acceleration, making them immediately due and payable in full. This default stems from the NYSE’s suspension of trading and delisting of Farfetch, a consequence of the proposed sale to Coupang.

Expressing deep concern, the Group questions the swift decline of Farfetch’s financial standing from a leading market position with over $800 million in liquidity at the end of 2023 in August, to a distressed sale by December. Analyst consensus, including JPMorgan, estimated Farfetch’s enterprise value at over $3 billion at the deal announcement, intensifying worries about the unexplained deterioration.

Moreover, the terms of the transaction support agreement (TSA) with Coupang, Greenoaks, and others, signed on 18 December 2023, present obstacles for potential alternative bidders by imposing a $1 billion fee and a $20 million termination fee in cash. The Group contends that this arrangement undermines fair competition and values Farfetch’s assets less optimally.

Believing in alternative avenues for achieving better value, such as a split sale to identified interested bidders, the Group asserts that the lack of transparency and governance in the process has put Farfetch’s luxury retail partners in a challenging position. The resignation of all independent executives from the Board of Directors on the day of the TSA announcement adds to concerns.

A spokesperson for the 2027 Ad Hoc Group warns against setting a risky precedent, stating, “Allowing this transaction to complete does not optimize the Company’s asset value when at least three other credible parties have expressed interest in acquiring the entire company or portions thereof.” The Group is actively exploring its next steps.

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