Coupang agrees to buy Farfetch, provide $500M bridge loan; Farfetch to be delisted, liquidated

Coupang (NYSE:CPNG) said it agreed to to acquire the business and assets of Farfetch (NYSE:FTCH). Farfetch shares were halted. Coupang fell 3%.

The agreement will give Farfetch (FTCH) access to to $500 million of capital, according to a statement from Coupang on Monday. Greenoaks is Coupang’s investment partner in this acquisition.

Upon consummation of the sale, Farfetch expects that holders of its Class A and B ordinary shares and its convertible notes will not recover any of their outstanding investments in Farfetch," Farfetch said in a statement on Monday. Farfetch Limited is also expected to be delisted from the NYSE and to be liquidated.

"Farfetch Limited and its financial advisors have conducted a thorough and extensive process to secure additional liquidity for Farfetch Limited and its subsidiaries," Farfetch said in the statement. "Without such liquidity, Farfetch Limited and its subsidiaries would have been unable to continue as a going concern. The Board is disappointed that the process has not resulted in a solution that ensures that Farfetch Limited, the listed entity, remains a going concern."

The agreement is with a lender group holding more than 80% of outstanding $600 million terms loans, according to an 8-K filing on Monday. South Korea-based Coupang and Greenoaks agreed to form a LP and lend Farfetch as much as $500 million loan. Interest on bridge loan will accrue at 12.5% per year, compounding monthly in payment-in-kind interest. A marketing process for all of the assets of Farfetch (FTCH) will be undertaken by JPMorgan.

The rescue deal comes after Miss Tweed on Friday reported that Farfetch (FTCH) was expected to make an announcement over the weekend or by Monday at the latest on its future. Sky News reported on Wednesday that Farfetch (FTCH) was in talks to secure emergency funding from private equity firm Apollo Global (APO) as the online luxury goods site tries to shore up its finances.

Farfetch (FTCH) employees received their December salary last week, two weeks in advance, as the company was trying to make sure staff are paid, according to Miss Tweed, which cited a source close to the company.

Farfetch (FTCH) shares have plunged 67% since Nov. 28 after the company said it won't release its Q3 results and Richemont (OTCPK:CFRHF) said it has no plans to invest or loan money to the company after a report that Farfetch's founder was looking to take the company private.

Separately, Richemont (OTCPK:CFRHF), Symphony Global and Farfetch (FTCH) announced that the companies have agreeed to terminate the agreements for the sale of majority stake in YNAP to Farfetch, according to a statement on Monday.

As previously stated, Richemont (OTCPK:CFRHF) has no financial obligations towards Farfetch and doesn't envision lending or investing into Farfeth. Richemont Maisons continue to operate on their own platforms and have neither adopted FPS nor launched e-concessions on the FARFETCH marketplace.

“Coupang’s proven track record and deep experience in revolutionizing commerce will enable us to deliver exceptional service for our brand and boutique partners, as well as for our millions of customers around the world,” Neves, said in the Coupang statement.