Keybridge secures $9.3m loan from WAM amid Yowie spat

The battle of egos that continues to play out between Geoff Wilson and Nicholas Bolton has heated up today as one combatant shows their strength with a bridging loan of up to $9.3 million for Keybridge Capital (ASX: KBC), which only has a market capitalisation of $10 million.

Wilson's camp at WAM Active Limited (ASX: WAA) took control of the board at Keybridge - where it has a 45 per cent stake - in April when a court confirmed the result of a February shareholder vote that removed three directors including Bolton, whose Australian Style Group owns 19.05 per cent of the company.

Bolton tried to appeal the decision but was denied in May, with the court also ordering an end to the external administration of Keybridge that was called when Australian Style Group was running the firm.

A formerly Bolton-led Keybridge had called in administrators after chocolatier Yowie Group (ASX: YOW) demanded the immediate repayment of a $4.6 million loan.

Yowie is majority owned by Keybridge but its board is stacked with Bolton and his affiliates from Australian Style, as well as his brother-in-law Diesel Schwarze, all of whom Keybridge is seeking to remove at an extraordinary general meeting (EGM) it has called for 27 June.

Yowie made an announcement to shareholders earlier this week questioning the validity of the meeting, telling them that if it takes place it would be held more than two weeks later on 14 July, and in different offices.

Yesterday Keybridge issued a release to the market stating it considered the "purported postponement is invalid, and has applied to the NSW Supreme Court seeking orders in relation to the purported postponement".

Aside from the attempt to delay the meeting, Yowie also issued new shares that diluted Keybridge's holdings from more than 66 per cent down to around 58 per cent.

Wilson has filed a complaint about the dilution to the Takeovers Panel, as well as a purported share dilution undertaken for another investor in Yowie called HHY, in which Keybridge has a substantial holding but the fund's responsible entity is Australian Style-connected Aurora Funds Management Limited.

In other words, quite the entanglement of interests in an interwoven set of small companies.

Today's announcement by Keybridge demonstrates Wilson's determination to have a say in the management of both companies, with Keybridge announcing it had secured a bridge funding facility from WAM Active with commitments of up to $9.3 million and an interest rate of 12 per cent per annum.

The facility is subject to an ASX waiver first ranking security over all present and after-acquired property of the borrower and guarantors. Prior to the waiver, it must also offer a security of 5 per cent of the equity interests of the borrower's last accounts given to the ASX under listing rules.

"Prior to entering the bridge funding facility, Keybridge required urgent short-term funding," the company states.

"Given that the bridge funding facility is being provided to address any solvency concerns and Keybridge has been suspended from trading for an extended period, Keybridge has been unable to secure equivalent funding to that offered by WAM Active, at an equivalent cost or within the urgent time frame.

"The bridge funding facility was negotiated with WAM Active on an arm’s length basis by those of Keybridge’s directors who are independent of the Wilson Asset Management Group. Those independent directors consider the facility to be fair and reasonable from the perspective of Keybridge’s shareholders."

Keybridge currently has a market capitalisation of $10 million and at the end of FY24 had $792,046 in cash, while Yowie's market capitalisation sits at $3 million and it had $197,000 in cash at the end of March after reporting a turnaround in performance to earnings of $33,000.

The bet on both sides might be that the companies are worth much more, or at least that was the rationale when the fight began.

Competing investors have been jousting for control for years in an attempt to unlock value, in many cases earning salaries for their directorships, or executive roles in the case of Bolton who is on an annual salary of US$522,000 ($802,965) as CEO at Yowie. For a short period he was earning a salary as CEO of both Yowie and Keybridge.

To compare with other companies of a similar size, Oliver's Real Food (ASX: OLI) CEO Natalie Sharp is on a base salary of $200,000, Macarthur Minerals (ASX: MIO) CEO and executive chairman Cameron McCall is on $300,000, Hydrix (ASX: HYD) executive chairman Gavin Coote is on $309,502, and Skin Elements (ASX: SKN) CEO and executive chairman Peter Malone is on $271,200.