The group behind health food distributor Tree of Life is in talks with lenders to secure its future as it battles supply chain issues and rampant inflation, The Grocer has learned.
It follows a failed attempt to find a buyer for Health Made Easy, the owner of Tree of Life and sister company The Health Store, earlier this year.
The group is now in the middle of negotiations with banking partners to agree new facilities to move forward.
Health Made Easy also restructured its management team, with former Tree of Life boss John Weaver appointed as CEO for the group and turnaround specialist Stuart Gould brought in to work alongside him and take on responsibilities from outgoing CFO David Main.
Chairman Michael Cole told The Grocer that Health Made Easy was looking to realign its banking facilities to “fit and support its revised strategy”.
“The group is facing up to the challenging circumstances of inflation impact and supply issues, as are many businesses at this time,” he said.
“We are working collaboratively alongside our longstanding suppliers and customers.”
Health Made Easy is the UK’s largest health and wellness distributor, supplying hundreds of brands and more than 15,000 SKUs to retailers.
It bought Tree of Life in 2011 and expanded the group with the acquisitions of The Health Store, which supplies independents, and vitamins, minerals and supplements brand Higher Nature and health-focused chewing gum and confectionery maker Peppersmith in 2018.
Revenues have grown from £34m to more than £100m over the past ten years as a result, operating from two DCs in the Midlands and employing more than 250 staff.
However, the 2020/21 accounts for the group and its subsidiaries are more than a month overdue at Companies House as it attempts to finalise its new lending agreement with banking partners.
An information memorandum (IM) circulated to potential trade and private equity buyers earlier this year showed annual sales for the year ended 28 March 2021 increased 3.6% to £100.3m, with forecasted revenues for 2021/22 of £102.9m and adjusted EBITDA of £4m.
Health Made Easy hired mid-market M&A advisor FinnCap Cavendish to explore the potential sale of the company, but the process – codenamed ‘Project Hogwarts’ – ended without success.
Cole said the group embarked on the project to find investors to provide “scope and capital for further development” on the back of a record performance in 2020/2021.
He added that Brexit had “significantly impacted efforts” to achieve the sale.
The IM revealed Brexit caused problems with exporting the group products to the EU, with a significant minority of revenues coming from the Irish market.
“This has restricted movement and affected sales of organic products to the point of elimination,” the IM noted.
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