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The advisory arm of McGrath Nicol has stepped in to assess the future of Wild Breads, a company operating under troubled asset manager Blue Sky Alternative Investments' (ASX: BLA) private equity fund.
Wild Breads is a wholesale artisan bakery that encompasses the Sol Breads, Nomad Breads and Wild Breads brands.
Blue Sky released a statement today that McGrath Nicol's Inline Advisory business has been appointed by the board of Wild Breads to evaluate its strategy, growth plans and capital structure requirements.
Blue Sky confirmed that, as part of the appointment, Inline Advisory would also help Wild Breads review its "potential acquisitions".
In addition to advisory, McGrath Nicol operates as a prominent insolvency firm and according to Blue Sky, recent media reports have "intimated" that its insolvency arm will be put to use in the case of Wild Breads.
Blue Sky went on to assure the market that this isn't the case.
"This appointment does not involve the insolvency arm of McGrath Nicol's business, as intimated in media reports," said the company in a statement.
"The board of Wild Breads confirms that it is meeting all of its obligations."
Following this update, Blue Sky's share price tumbled 6.6 per cent at the time of writing (12:50pm AEST) to hit $5.24, a far cry from almost two months ago when BLA stock was trading at $14.12.
The company's dramatic share price wipe began last week after short-selling hedge fund Glaucus Research Group released a report which claims Blue Sky has been "significantly overstating" its fee earning assets under management (AUM).
The Glaucus report claims the company's AUM does not exceed $1.5 billion, 63 per cent less than its reported figure.
Glaucus says Blue Sky may be compensating for its overstated assets under management by charging clients egregious management fees.
It also estimates that BLA shares are only worth $2.66 per share.
Blue Sky managing director Robert Shand (pictured) wrote an open letter to investors earlier this week, hitting back at Glaucus' allegations and reassuring the market that his company remains in "very good shape" with a strong balance sheet.
"Over the last 10 days, our company has been attacked by a foreign activist short seller," Shand says in the letter.
"The only long-term solution to this attack is to continue to demonstrate the performance of our business through continuing to grow our fee-earning AUM and delivering return for our investors.
"In parallel, we must better communicate to the market what we do and how we do it.
"Whilst this occurs, you may rest assured that our business is in very good shape. Our balance sheet is exceptionally strong."
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