Keybridge appoints administrators after Yowie calls in loan

Listed investment firm Keybridge Capital (ASX: KBC) has called in a voluntary administrator after failing to reach an agreement with chocolate company Yowie (ASX: YOW), in which it has a majority shareholding, over a $4.6 million loan.

Yowie is now considering a "range of capital solutions" given the likely delays that Keybridge's administration will cause in recovering the loan funds.

Corporate raider Nicholas Bolton is CEO of both companies where his own Australian Style Group exerts influence, with a substantial holding and board dominance at Keybridge that was leveraged to secure Bolton the leadership at Yowie in May last year.

Bolton and Geoff Wilson's WAM Active (ASX: WAA) have been at loggerheads for control of Keybridge for years, with Wilson's affiliated funds holding more than 45 per cent of the group, Bolton's group owning more than 19.05 per cent, and media figure Anthony Catalano holding almost 11 per cent.

Under a directorship that includes three Bolton nominees and Catalano, Keybridge has been trying to raise capital since October 2024 but notes WAM Active has "persistently" attempted to prevent efforts to shore up extra capital.

It was rumoured in the AFR last week that Catalano had a falling out with Bolton, and that he planned to vote with Wilson at an extraordinary general meeting (EGM) due today on several resolutions, including the removal of Bolton from the board of Keybridge.

Keybridge had intended to use funds from a capital raise for "extraordinary unbudgeted legal costs" associated with WAM-related court hearings, debt reduction, and working capital.

The debt reduction part of the puzzle includes paying back a $4.6 million reciprocal loan facility from Yowie that was executed on 23 May 2024 - a day after Bolton became CEO of Yowie once payments had been received by shareholders as part of Keybridge's off-market takeover bid for the company.

Keybridge revealed this morning that on 6 February an independent sub-committee of Yowie Group formally demanded a repayment of the loan by 5pm the following day.

The loan was provided for a three-year term but with certain conditions under the loan agreement.

"The lender exercised its rights under the loan agreement to demand full and immediate repayment, citing, amongst other things, the delays in Keybridge’s proposed capital raising, which was understood to repay a material portion of the loan, causing a consequential knock-on effect to its business," Keybridge reported to the market this morning in a letter dated Sunday, 9 February.

"Keybridge notes the significant impact on its business flowing from WAM Active Limited’s (WAM) persistent attempts to prevent it from raising capital. The most recent injunctive relief obtained by WAM preventing shareholders from approving a capital raising (including raising money from WAM), is supported by an undertaking as to damages from WAM.

"The company was unable to reach a formal agreement regarding an extension or restructuring of the loan given the restrictions around its future capital raising capability."

Keybridge also emphases that WAM's repeated attempts to secure interlocutory relief have led to several postponements of Keybridge's general meetings. A Supreme Court of NSW hearing was due to take place today, but has been vacated to a later date with "a decision now not likely to occur until mid-March 2025".

Against this backdrop the Keybridge board of directors unanimously resolved to appoint Gideon Rathner from Lowe Lippmann Chartered Accountants as voluntary administrator. A first statutory meeting of creditors must be held within eight days, and all KBC listed securities will remain suspended.

After reporting an $8.94 million net loss in FY23, Keybridge's results were back in the black at $7.25 million in FY24, largely due to a successful trade of Magellan Global Fund Options (ASX: MGFO). The group reported accumulated losses of $263.27 million as at 30 June 2024, although a combination of issued capital and reserves tipped total equity into positive territory at $11.4 million.

Yowie reported a decline in group net sales to $3 million in the December quarter, and finished the year with the resignation of independent director Scott Hobbs on 23 December, leaving just three members on the board of whom two - Bolton and John Patton - are Australian Style Group stalwarts. The third is executive director Andrew Ranger, co-founder of technology group Memories.

Yowie saw a negative net cash outflow for the period, reporting net cash outflows from loans to other unspecified entities of $803,000, which compares to net cash inflows of $881,000 from operating activities.

The company finished the year with just $269,000 in cash and cash equivalents, and $3.1 million worth of unused financing facilities. And who is the lender providing that unsecured facility? None other than Keybridge.