Farfetch Limited (NYSE:FTCH) shareholders will not recover any value from their investments in the company once its $500 million rescue deal with South Korean e-commerce group Coupang is finalized, analysts at UBS have highlighted.
Per the online luxury retailer’s statement on Monday, “Upon consummation of the sale, Farfetch Limited (NYSE:FTCH) 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 Limited (NYSE:FTCH) is also expected to be delisted from the NYSE and to be liquidated."
“There can be no assurance that the conditions to the sale will be satisfied. Should the sale fail to close or fail to close in a timely manner, there is substantial doubt about Farfetch Limited (NYSE:FTCH)’s ability to continue as a going concern.”
The analysts also pointed out that the transaction will likely take place via the English-law pre-pack administration process if there is no competing offer to the one made by Coupang.
“There is no need for the proposed plan to be presented to the different classes of creditors or for creditors to vote on the plan,” the analysts wrote in a note to clients.
“Thus, the business and assets can be transferred to the purchaser ‘discretely and quickly.’”
The UBS analysts have a ‘Neutral’ rating on Farfetch and a US$0.80 price target.
Shares of Farfetch last traded hands on December 15 at US$0.64, down 85% in the year to date.