BWX lender CBA calls in KPMG as receiver

BWX, which sells Sukin beauty products, is now in the hands of administrators at FTI Consulting.

BWX’s largest lender CBA has tapped KPMG as it placed the skincare products company into receivership on Tuesday.

At December, CBA was owed $105m by BWX, and it comes after administrators at FTI Consulting were appointed on Monday.

KPMG’s involvement was revealed by DataRoom online on Tuesday and KPMG said later in a statement it would stabilise the business before running a sale process.

The Australian-listed BWX is involved in the manufacture, distribution and marketing of beauty products, sold predominantly under the Sukin, Andalou Natural and Mineral Fusion brands and the e-commerce platforms Flora & Fauna and Nourished Life.

KPMG Australia’s David Hardy, Gayle Dickerson, James Stewart and James Dampney have been named as the receivers.

On Monday night, BWX, which counts billionaire Andrew Forrest as its major shareholder, announced that it had entered voluntary administration with FTI Consulting’s Kate Warwick, Joe Hansell and Kelly Trenfield appointed.

It comes after Allegro Funds weighed a recapitalisation of the business but walked away from the opportunity to focus on its Slater and Gordon law firm purchase, while private equity funds such as Bain Capital and Avenue Capital have been hovering.

It is understood that a number of funds in recent months have cast their eye over the company, which had been carrying out a review through EY, so it will be interesting to see what parties surface as prospective buyers.

It has been a bumpy ride for BWX shareholders - they have seen it fall from a business worth about $1bn five years ago to last trade as a group with a $40m market value.

Dr Forrest’s Tattarang owns 20.3 per cent of BWX, while other major shareholders include Bennelong Funds with 21.8 per cent and Paradice Investment Management with 5.7 per cent, according to Bloomberg data, while Regal Funds and Eley Griffiths group also have smaller positions.

The Forrest family’s Tattarang Venture’s became a substantial shareholder in BWX in June, acquiring a 16.9 per cent stake in the company for $30.22m.

Industry analysts say that BWX operates in a tough industry, where its major customers are Coles, Woolworths and Chemist Warehouse.

While the customers have strong pricing power, compounding challenges for BWX is that it competes against major international players in the skincare market.

A market analyst said it could make sense for an international competitor to buy BWX.

BWX is among a number of groups to have recently failed, including the breweries company Tribe, Scott’s Refrigerated Logistics, lender Open Pay and builders Porter Davis Homes (in liquidation through Grant Thornton) and Lloyd Group through Deloitte.

Sources in the insolvency industry say that the amount of company distress had grown considerably in the last four months, as the Reserve Bank of Australia kept rates on hold on Tuesday after a series of rises to curb large levels of inflation.

There are reports that most insolvency firms are now experiencing large caseloads, particularly when it came to small and medium enterprises, as they struggle with the rising cost pressures.

The operations of BWX outside of Australia and the Go-To skincare business of Zoe Foster-Blake were not included in the administration, BWX said in a statement to the market on Monday.

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 has its own independent team across all departments of the business and are based in its own offices in Sydney.

The company on Monday said Go-To did not utilize any BWX manufacturing or development capabilities and supported its retail partners through its sales and retailer management team out of Sydney.

A range of issues have continued to impact the Australian operations of BWX, including customer destocking and inventory and working capital issues necessitating the director’s decision to appoint administrators, BWX said in a statement.

The directors said they believed entering voluntary administration would help progress the restructuring process already underway with new management at BWX and give the company the best chance of future profitability.

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 sale process, BWX said, and BWX would trade the Australian operations of BWX on a business-as-usual basis.

Trading in the company’s shares on the ASX will remain suspended during the administration period.

BWX had a waiver with its lenders until March 31.

It made a $101m loss for the six months to December as revenue fell 18 per cent amid a period of a weakening economy and higher manufacturing costs.

At December, the business had $86.5m of net debt or $128.1m including lease liabilities.

Last year, directors departed after the group’s chief executive David Fenton left in March.