FASHION chain Oasis is involved in a £54m management buy-out deal.

Independent directors of the group have recommended the 103p-a-share deal, which is led by chief executive Derek Lovelock and backed by PPM Ventures, the venture capital arm of Prudential.

Mr Lovelock, who became chief executive in November 1999, said: "I am delighted that PPM Ventures has had the vision to recognise the potential of Oasis and its management team. Our new status will enable us to focus on the needs of the business in order to rebuild profitability.

"This is clearly an exciting prospect for both the Oasis and Coast brands."

The deal comes six months after the group first revealed it was the target of MBO plans, sparking a sale process involving both trade buyers and venture capitalists.

It followed tough times for the group, which in January issued its second profit warning in five months after suffering from the downturn in fashion retailing and stocking errors.

In April, it announced a fall in full-year profits, from £11.1m to £6.1m.

At the same time, it said Michael Bennett and Maurice Bennett, the brothers who founded the business a decade ago, and Vivian Scott, former managing director, would step back from day-to-day involvement in the company.

Together, the three hold 33 per cent of the company's shares.