Two private equity firms controlled by the Chinese government may have lost more than $585 million on a Sydney vitamins manufacturer, which was put into receivership Monday.
Nature’s Care, a supplier to Chemist Warehouse, was placed under the control of BDO Australia after defaulting on loan payments, the business advisory firm said.
The decision was made by members of the wealthy Taiwanese-Australian Wu family, which founded Nature’s Care in 1990 and sold three quarters of the company in 2018 to two Chinese funds, JIC Investments and Tamar Alliance Fund.
Press reports put the 2018 sale at $585 million, although the investors have since lent the company money, which means their losses could be higher.
The funds were working on their own administration plans for Nature’s Care, under KordaMentha partner Ryan Rabbitt, when outmanoeuvred by the Wu family, which bought most of the company’s debt after being expelled from the Nature’s Care headquarters on December 27 by the Chinese interests.
The funds then unsuccessfully sued in the NSW Supreme Court to stop the family taking back control of the business. They are now trying to avoid paying the family’s legal costs by asserting they are not subject, as foreign companies, to rulings by the court.
A spokesman for the Wu said they declined to comment. The Chinese funds couldn’t immediately be reached for comment.
A BDO spokesman said: “The receivers and managers are undertaking an urgent assessment of the business, with the intention to stabilise the business and facilitate a restructuring or competitive sale process in due course.”
BDO partners Andrew Sallway and Jeff Marsden, and Duncan Clubb, the national leader of business restructuring, have been appointed managers of the business. An earlier plan to call in administrators would have cost $20 million, according to court documents.
The Wu family, led by matriarch Jina Chen, face a separate $207 million tax bill over the 2018 sale. They are being sued in the Federal Court by the tax office for the money and have had assets frozen.
Nature’s Care, which produces fish oil, garlic pills and other food supplements for Australia and overseas markets, is profitable but has struggled under big debts. Court documents show that it missed a $138 million loan payment in August, but made $23.7 million, and is forecast to make $32.8 million this year, in operating profit. (Source: afr.com)
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