BWX Crumbles And Falls Into Voluntary Administration & Zoe Foster Blake’s Go-To Goes On Sale

BWX Crumbles And Falls Into Voluntary Administration & Zoe Foster Blake’s Go-To Goes On Sale

BWX collapsed yesterday as Commonwealth Bank ceased to support the cosmetics group and its operations entered voluntary administration.

“In light of recent communications from the company’s lender, the company’s board is considering how to best protect the interests of the company and the group as a whole in the absence of an agreed refinancing,” said BWX in a statement to the ASX.

The group had been in breach of lending covenants outlined by the Commonwealth Bank since November, yet the bank had agreed not to act on loan breaches until March 31.

Commonwealth’s agreement to not act on loan breaches ended last Friday, which meant BWX needed to find another arrangement with Commonwealth or other financiers yesterday or collapse.

However the CBA has chosen to not extend it’s waiver. As a result, BWX’s operations have reverted to voluntary administration with Kate Warwick at the helm with a team from FTI Consulting.

Foster-Blake had sold 50.1 percent of Go-To to the group in 2021 for $89 million.

However unlike BWX, Go-To remains profitable and the directors are searching for a buyer for the controlling stake of the skincare brand.

“The directors have been actively working to find a compatible buyer for BWX’s 50.1 per cent shareholding in Go-To. The administrators intend to continue this sales process,”

Go-To has been stressing its independence from BWX as they look for an appropriate buyer.

“Go-To is run and managed independent of BWX, with a wholly separate treasury function as well as separate cash flow management including accounts payable.”

“Go-To operates as an independent entity, managing its own treasury, formulations, manufacturing and retailer relationships. We have an independent Sydney-based team led by our CEO, Brad Dransfield, and no financial, manufacturing or supplier affiliations with BWX,”

“The Go-To business is in a strong position with year-to-date performance seeing double-digit growth.” said Go-To.

The board has stated that voluntary administration will assist the restructure.

“In light of recent communications from the company’s lender, the Company’s board is considering how to best protect the interests of the company and the group as a whole in the absence of an agreed refinancing,” said BWX.

BWX continues its suspension from trading until further notice.

“Until there is material certainty that the refinancing can be completed or the company can otherwise continue as a going concern, the board has formed the view that a suspension of the company’s shares is appropriate,” said BWX.

Go-To is in a unique position, as an option enables Foster-Blake and other investors to elect to sell their 49 per cent stake to BWX for $59.2 million cash as early as next year.

The suspension of channel stuffing and the resulting cash constraints, had put BWX on the brink of collapse before billionaire Andrew Forrest saved the group in July of last year.

Channel stuffing is a way to inflate a company’s revenue before a reporting period by selling more products to retailers than can be sold to consumers.

This meant that retailers had to sell a backlog of goods, and while BWX still had to advertise these products, it didn’t receive any cash from these sales which were already paid-for.

Feature image source: Youtube/@Escape Australia




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