Contrary to some rumours, Bounty Brands, local distributor of the clothing and footwear brands Diesel, Hurley, Jeep apparel and footwear, Superdry and Vans, is not in business rescue, assures Group CEO Stefan Rabe. Nor does Bounty Brands owe any money to former brand owners/distributors, he says.
Some of the former distributors, however, feel differently. “The question one needs to ask all the previous owners of the brands [aka the distributors] is whether they have their money and they must explain what has transpired in their individual cases,” says a source. “Who has the brands and who has the money?” asks another. “Why has Bounty made various settlement offers to the five vendors, if they don’t owe them money for the brands and companies they purchased, and are enjoying the profits?”
Unfortunately, none of the former distributors wished to answer these questions on record.
What could have contributed to this view is that four divisions of Coast2Coast (C2C), the private equity firm that founded Bounty in 2014, was recently placed in Business Rescue and the Business Rescue Practitioner had been in contact with various creditors. Sports Trader was promised information about the affected C2C divisions and creditors by the Business Rescue Practitioner, but unfortunately it did not arrive at the time of publication.
“As a private equity business, the C2C Group raised acquisition funding from a large number of commercial lenders, as well as private individuals,” Rabe responded to a written question. “C2C is now unable to meet its repayment obligations and I expect that some of the claims you refer to have arisen out of such funding arrangements.”
C2C is a Malta-domiciled private equity investment company, mainly known for its investment in the listed multinational pharmaceuticals business Ascendis Health, which was expanded through various acquisitions in the health sector. Apart from Bounty Brands Holdings, C2C also had interests in unlisted consumer companies Marlin Brands in Australia and Kronso in Poland.
When the Ascendis share price dropped in 2018 due to low growth and high debt, C2C founder Gary Shayne and related entities experienced financial difficulties. They sold most of their shares in Ascendis and Shayne resigned from the board.
To further raise funds, they also sold C2C’s majority shareholding in Bounty Brands Holdings in February 2019. “The current owners consist of a combination of high net worth individuals, fund managers and other financial institutions,” says Rabe. “None of the C2C entities under business rescue have any shareholding in Bounty.”
The brands in the Bounty Apparel division all have multinational owners and Bounty Brands is their South African agent (wholesale distributor).
The first footwear brand to become part of Bounty Brands in 2014 was Vans, formerly distributed by Chappers Sports Direct, whose founder Nigel Chapman became the Bounty Apparel MD. This was followed by the acquisition of Hurley and Musgrave Agency’s Jeep clothing. In 2016 Bounty Brands acquired Footwear Trading, which had the licenses for Diesel, Levis and Jeep footwear brands in South Africa. This brought the revenue contribution by the group’s apparel and footwear brands to over R1-bn.
According to the Western Cape High Court roll, some former owners of Musgrave Agencies is currently in litigation with Bounty Brands, but none of the two parties want to comment on the nature of the litigation.
Bounty retained the services of some of the original owners of the local brand distributorships – e.g. Chappers Sports Direct, Musgrave Agencies and Footwear Trading – for a period of time “to facilitate a responsible handover of the brand relationship, but all of these arrangements ended some time ago,” says Rabe.
In 2018 Bounty Brands consolidated the four apparel and footwear businesses into one, operating from one distribution center in Cape Town. The division’s name was changed to Bounty Brands Apparel.
The brands are predominantly distributed to retailers, but Bounty Brands have their own concept stores to ensure that the full range of the various brands is presented to the market. “We segment our brands to ensure that we have products available to a wide range of retailers, including independents,” says Rabe.