Candy Club, the ASX confectionary group backed by an arm of the Baillieu family, has collapsed into administration

Candy Club, the subscription lolly marketer chaired by Melbourne’s Baillieu family scion James Baillieu, has been placed into voluntary administration.

Candy Club, the subscription lolly marketer chaired by Melbourne’s Baillieu family scion James Baillieu, has been placed into voluntary administration as the candy seller tried to pursue a merger or investment deal with US banks but which ultimately failed.

Founded in 2015 by entrepreneur Keith Cohn, Candy Club operates an omnichannel strategy with a vision to become the world’s leading speciality market confectionery company. Candy Club is headquartered in Los Angeles, California, and was backed by a number of high profile investors including Mr Baillieu, the nephew of former Victorian Premier Ted Baillieu, young rich list member Adam Schwab and the Coors family of the US.

Shares in Candy Club were suspended from trading earlier this month.

In early October, Candy Club announced it had received notice that a potential merger deal financed by private equity had been withdrawn after more than 50 parties signed nondisclosure agreements to look over the business. It said at the time that market conditions this year had been very adverse to pre-profitability growth companies, including Candy Club.

With no merger deal or investment agreement secured, Candy Club said in early October that $6.6m was owed to Western Technology Investment and was being paid back in monthly instalments of approximately $65,000 in interest and $150,000 of principal rising to $225,000 of principal monthly as of December 1. The current liquid assets of the company were listed as $740,000 in cash, $1.4m in accounts receivable, $6.3m in inventory, and $1.8m in accounts payable.

Candy Club last year said it had struck a deal with a US magazine publisher to distribute its candy products in American supermarkets, capping a year when its share price has risen more than 700 per cent.

The group had also secured the distribution agreement with A360 Media Entertainment Group, a publisher of leading household titles like Us Weekly, Men’s Journal, In Touch and OK!.

It followed a roller coaster ride for Candy Club shares that had risen more than 700 per cent off their 12-month low of 3c and a $5m placement at the end of November 2020, which was oversubscribed and up-scaled from an initial target of $3.5m.

The issue was priced at 12c, with Candy Club shares later trading at 23c.

Mr Baillieu and Candy Club director Kan Tang together took $1.5m of the placement, which also saw support from a number of new institutional investors.

Candy Club shares last traded at 4.6c, having lost almost 80 per cent of their value in the last 12 months.

Originally published as Candy Club, the ASX confectionary group backed by an arm of the Baillieu family, has collapsed into administration