Beechbrook Capital specialises in providing SMEs with loans of between €2 million and €6 million. Based in Britain, it has advanced finance to 65 businesses since being established in 2008. It has been active in the continent also, operating from an office in Frankfurt.

In early 2019, it decided to enter the Irish market through a bespoke €35 million Irish SME Fund. It teamed up Ireland Strategic Investment Fund (ISIF) and the Finnish private credit manager Certior, each of which committed €16 million. According to its criteria, it is willing to back companies with a turnover of between €3 million and €25 million that have a minimum Ebitda of €1 million and a demonstrable track record of profitability and cash-flow generation.

Its first investment came in November 2019 when it advanced €7.5 million to Bio-Medical Research (BMR), a Galway-based wearable technology company behind the Slendertone and Flex Belt muscle-toning belts.

“This first investment in the fund underlines our excitement about opportunities in the Irish market. We have enjoyed getting to know the BMR team and look forward to working with them to develop the growth potential of this indigenous Irish success story,” David Merriman, co-head of Beechbrook Capital Ireland, said at the time.

Within three years year, the BMR investment has turned sour. The company sought bankruptcy protection from its creditors and the appointment of an examiner in March as part of a process designed to secure a new investor. Last week, when it became clear that a rescue plan was not going to materialise, it collapsed into liquidation, a devastating blow for its 52 employees.

Now, The Currency has learned that Beechbrook has appointed a receiver over the company. The move was made following the liquidation on foot of a charge the British funder had over BMR’s assets, including its property interests in Galway, its intellectual property and its trading business.

Mark Degnan, an insolvency and restructuring partner with Deloitte, has been installed as receiver. He will now attempt to sell off the assets. If a trade buyer is found, the move could save some of the company’s 52 jobs.

Beechbrook will be central to any deal. Sources say it may be willing to roll over its debt funding to a new buyer if it believed it could generate a better return than simply selling off the assets.

Another party central to any future deal will be the company’s largest trade creditor, PCH International, the Chinese-based manufacturing and logistics business owned by the Cork businessman Liam Casey. It is owed €4.5 million and manufactures the company’s devices.

If a deal is to be agreed to salvage the company from receivership, it will require the backing of both Beechbrook and Casey.

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From early March, Nicholas O’Dwyer, a partner with Grant Thornton, had been attempting to piece together a rescue plan to salvage BMR. As examiner to the business, his job was to talk to potential investors and cut deals with creditors.

Last week, as the deadline approached, a deal seemed likely. Casey, one of Ireland’s most respected entrepreneurs, was working on a deal with Pat Phelan, a technology entrepreneur who is currently rolling out Sisu, a provider of aesthetic treatments, internationally. Beechbrook was also party to the deal.

Between debt rollover and new investment, the rescue package totalled around €6 million. However, as the deadline approached, the deal began to unravel. The legacy costs remained too high, and the chances of a turnaround too low.

The Casey and Phelan bid withdrew, leaving the examiner with no option but to tell the court to appoint a liquidator.

However, the company is a much more attractive proposition now that it is in receivership and liquidation. Legacy contracts are now moot. A potential bidder can buy its intellectual property and sales pipelines, without acquiring leases and other fixed costs.

PCH is the manufacturer of most of the company’s products and is also housing its inventory. So, it seems inconceivable that a deal can be agreed without Liam Casey. When contacted about his potential interest, Phelan said: “No comment.”

Other potential suitors are understood to be interested in acquiring the company’s technology or its trading business. Advertisements will be published in the coming days. One way or the other, the company is back in play.

International markets

Last year, BMR posted losses of €5.25 million. Bank of Ireland and Beechbrook are secured creditors owed around €1.3 million and €8.2 million respectively. Revenue has warehoused company PAYE/PRSI debts of just over €1 million. In liquidation, it is estimated that BMR’s debts would rise to €16.9 million.

However, its attraction is its product and its international reach. The key sales markets for BMR are Canada and the US in North America; France, the UK, Germany and Spain in Europe; and in Asia: Japan, Korea, China and Singapore. The group sells direct to customers online, as well as through Amazon and bricks-and-mortar chains like Boots and Argos in the UK; Fnac in France; El Corte Inglés in Spain; and Target and CostCo in the US.

In recent years, BMR has seen a major shift to online retailers such as Amazon. This trend accelerated during the pandemic with digital now accounting for 77 per cent of sales compared to 44 per cent in 2019.

Assets and spin-offs

In addition to the trading business, the company has a few other assets. The first relates to property. Court records show that at a board meeting on July 14, 2021, BMR agreed with Beechbrook Capital that it would look to sell its property in Galway valued at approximately €3 million and look to raise equity from its shareholders to provide additional cash flow to the business. Despite BMR engaging Cushman and Wakefield to sell the Galway property in August 2021, it was not until February of this year that an offer of €2.6 million was received. As part of court papers submitted to support the examinership application, management say they are currently considering this offer.

BMR also has a stake in a spin-off business. In 2015, it launched a separate company, Atlantic Therapeutics, responsible for Innovo, a wearable device to help urinary incontinence. In 2019, Atlantic raised €28 million in additional investment ahead of a move into the US, just months after receiving FDA approval. Documents submitted to support the examinership state that an attempt by BMR to sell its 6 per cent stake in Therapeutics to its existing investors failed.

Further reading

Having failed to secure a new investor, Slendertone has collapsed into liquidation

What happened to Slendertone? How the fitness wearables firm fell badly out of shape