How Zoe Foster-Blake was able to buy back Go-To and save her millions

However, last week’s full-year guidance range had a midpoint of just $14 million – no higher than its semiannual figure.

It’s a big year-over-year decline, but investor updates emphasize that flagship brand Sukin is still increasing sales by 24 percent to hit a three-year high. Sukin is thus unlikely to be a problem child. As such, Go-To may not yet achieve the $19 million revenue in financial year 2022 previously estimated in internal documents.

The downgrade created some pressing problems for BWX’s balance sheet, and the $23 million upgrade felt rushed. While 50 percent discounts are not uncommon on Sukin products, their extension to the parent company’s share price is worrying.

The stock was lowered by just 60¢ – no more than the price paid for the first half of the Go-To.

Given that BWX paid dividends of about $4 million a year ago when its stock price was $5.31, this is an unfortunate “sell low, buy high” cash management strategy.

But, the wealth meltdown for BWX shareholders may not have made the Foster-Blake 1¢ any poorer. Demonstrating the foresight that must have been the envy of Andrew Forrest’s Tattarang, who became a significant shareholder only weeks before the downgrade and then invested further in the placement, Foster-Blake did not receive a single share as payment for Go-To.

The market update also announced a new company strategy to “prioritize the sustainability of future profit margins”, which is the company’s jargon for “make money when we sell stuff”.

The initiatives detailed in the investor presentation include raising prices, reducing spending, and selling more. It is a new kind of plan that makes people reflect on what the old plan really was.

The urgency surrounding the capital increase is likely related to the debt agreements held by the CBA lender. In exchange for paying off $10 million in debt, the bank has agreed to waive any breaches – but only until September 30. That kick can on the road isn’t really AFL standard.

A much bigger issue is how BWX will find the money to pay for Zoe Foster-Blake’s almost inevitable exercise of put options by 2024. The lack of detail surrounding its structure, such as base income multiples, leads one to assume that she may have negotiated the $93 million floor.

Where to

Unless the world starts partying again like 2021, it will be very expensive. Not only is BWX short on cash to settle, but at its current market cap, closing the deal would weaken shareholders by another 50 percent.

To raise cash, BWX has decided to release new non-core assets. One possible target is a small online ethical lifestyle business called Flora & Fauna, whose revenue in 2021 is around $16 million.

BWX bought this minnow for $28 million using its favorite acquisition currency, all-cash. No earnings figures are given, but along with stablemate Nourished Life, the two will struggle to earn more than 1x the earnings, and probably a lot less. BWX will shower at this price.

There are two big questions hanging over BWX – do you still want to pay for Go-To or focus more on bigger offline brands like Sukin? And will Forrest’s Tattarang take over? Tattarang chief investment officer John Hartman has not given any indication of the company’s intentions, but said it is a long-term investment.

If Go-To’s revenue is flat in FY22 – a big “if” in a tighter ecommerce environment – ​​then in today’s market it might be worth between $50 million and $75 million.

Foster Blake was able to go beyond that and offer $80 million for a full buyback, offsetting this price with his future option payments. BWX will effectively pay him the final $10 million for agreeing to take back full ownership of his business. This crazy deal only makes sense because it would wipe out the company’s $93 million liability on BWX’s balance sheet.

It could also work because BWX has become the company’s Cerberus, persecuting the careers of anyone who wants to tame it. Rory Gration has only been BWX’s chief executive since March, and processes are underway to replace the four non-executive directors. This total purge might make a painful Go-To exit achievable, as the new CEO can blame the last person for the mess and exiting board members are unlikely to object.

As far-fetched as it sounds, Foster-Blake might actually have a chance to regain full ownership of Go-To Skincare, while also keeping $100 million in cash from BWX shareholders. Doing this will make for better bragging rights than the Gold Logie.

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