Liquidators appointed to Halo Food Co

Creditors of formerly ASX-listed fallen angel Halo Food Co (ASX: HLF) have voted to wind up the company after more than five months under administration, appointing Michael Korda and Robert Hutson of KordaMentha as liquidators.

The business, formerly known as Keytone Dairy Corporation, went into administration in August following a strategic review process that failed to unlock value through divestment, mergers, acquisitions or any other opportunities.

Founded in 2011, Halo is known for its contract manufacturing work as well as brands such as Gran's handcrafted fudge, premium milk powder KeyDairy, and sports nutrition beverages Tonik.

In early 2022 the group bought dietary program The Healthy Mummy for $17 million, only to sell just weeks out from administration in August 2023 for a mere $588,540.

In the 12 months to 31 March last year the group reported a 36 per cent spike in sales to $82 million, but the cost of sales rose by almost the same amount while other costs rose across the board - most notably a $36 million impairment of assets relating to The Healthy Mummy as well as Omniblend, which is behind the Tonik brand and was purchased for $18 million in 2019.

Even without these impairments, Halo Food Co's loss would have almost doubled from its FY22 result that was $8 million in the red.

Revenue from proprietary brands barely budged upwards, New Zealand revenue went backwards, and the lion's share of sales increases came from the contract manufacturing business. But gains for the latter were damped by a deluge of added costs for marketing, administration, benefits expenses for directors and employees, financing and the depreciation of assets such as plant and equipment.

In August the company bit the bullet and appointed Michael Korda, Kate Conneely and Rahul Goyal of KordaMentha as administrators. In October they managed to negotiate the sale of Halo's Sydney operations to Gold Coast-based Body Science and its Swedish parent company Humble Group for an undisclosed sum.

David Hardy, Ryan Eagle and Emily Seeckts of KPMG, who were appointed as receivers and managers in August, will continue to have day-to-day control of Halo's assets and trading operations.

The vote to place the company in liquidation took place on 30 January 2024.