Lifeline thrown as SurfStitch gets a new owner

The fate of embattled surfwear chain SurfStitch Group (ASX: SRF) has been decided with the company now falling under the new ownership of online retailer EziBuy.

At a meeting of creditors today, two-thirds of votes were in favour of accepting EziBuy's deed of company arrangement (DOCA) proposal to absorb SurfStitch.

Ezibuy is an online New Zealand business which sells apparel and homewares.

SurfStitch administrators John Park, Quentin Olde and Joseph Hansell of FTI Consulting received a second DOCA proposal from Cheadle Group, however their opinion was the EziBuy proposal was superior and would result in a better return to creditors.

Cheadle Group's offer was conditional on settlement of class actions against SurfStitch and included swapping debt for equity for major creditors.

SurfStitch went into voluntary administration in August after the impact of a series of legal battles and class actions took their toll on the online retailer and ASX listed company.

The company downgraded its earnings three times, largely because of a dispute with surf technology group Coastalwatch and Crown Financial over the licencing deals which fell through, and this wiped around $20 million off revenues.

The company was reluctant to enlist administrators FTI Consulting and it still faces a $100 million class action filed on behalf of shareholders by Quinn Emanuel Urquhart & Sullivan.

SurfStitch entered the ASX as a market favourite in 2014, however its spectacular fall from grace wiped almost 93 per cent off its total market value.

SurfStitch's new owner EziBuy is a leader in the catalogue and apparel space, with more than 1.75 million orders a year made on its platform by customers across Australia and New Zealand.

Last year, EziBuy was acquired by Alceon Group whose other investments include a major shareholding in Noni B and a controlling interest in Cheap as Chips.

Business News Australia