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Zoe Foster-Blake’s Go-To says it is not affected by the financial troubles of its controlling shareholder.Credit:Joe Armao

BWX,which makes and sells top-selling brands such as Sukin through Chemist Warehouse,Coles and Woolworths,as well as having a controlling stake in Go-To,has been in breach of debt covenants since November and had been trying to refinance its loans with the Commonwealth Bank.

“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,” the company said.

“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.”

The board said the voluntary administration will help progress the restructure underway and give the company the best chance of future profitability.

Monday morning,BWX had confirmed that it lost the support of its bank.

“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,” the company said.

The bank had extended its waiver of debt covenants to Friday,March 31.

BWX extended its suspension from trading while the board decided its future.

“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,” it said.

The group needed to refinance its operations which suffered from a shortage of cash in recent months,and forced it to delay payments to its creditors.

The group has also been crippled by the discontinuation of its practice of channel stuffing,which threatened to unravel BWX in July last year before billionaire Andrew Forresthelped rescue the group.

Channel stuffing involves retailers inflating sales by “selling” more products to their distributors than they can readily sell to consumers.

Andrew Forrest helped rescue the group in July but it is again teetering on the edge.Credit:Bloomberg

BWX has suffered a cash drain as its retailers sell the backlog of goods in their distribution centres,which meant it did not get any fresh cash for these already-paid-for sales.

Foster-Blake’s Go-To was already touting its operational independence from BWX which paid $89 million for 51 per cent of the business in 2021. Foster-Blake,and other investors,can choose to sell their 49.9 per cent stake to BWX for $59.2 million cash as early as next year.

“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,” Go-To said.

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

Go-To has just launched a retail presence in Europe via 220 stores operated by German cosmetics retailer Douglas.

BWX’s financial woes triggeredthe collapse of Purely Byron last month - the beauty brand co-founded by model and actor Elsa Pataky and backed by her husband,Hollywood star Chris Hemsworth.

BWX’s cash shortage woes meant it could no longer fund the venture,which launched its first products less than a year ago and was years away from breaking even.

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