‘Very distressed’: Bubs founder says investor concern prompted serious action

The company said product sales into China remained below expectations in April and May, but that C2 Capital’s Jackie Lin had the right qualifications to lead a strategic review into Bubs’ China operations.

“The Company has already made significant progress on right sizing the cost base supporting the China business and resetting the China strategy with a view to creating a truly diversified multichannel approach,” the company said.

Central to the tensions at Bubs is the performance of an exclusive distribution deal that Bubs inked for sales into China with AZ Global for a product called “Bubs Supreme”. AZ Global hasn’t sold all of the $50 million worth of product assigned to it, and the excess inventory in the market is creating a challenge for Bubs’ China sales targets.

But the Carr camp has high hopes they will be successful at persuading these investors to vote in favour of a spill and a switch to new management at Bubs, including installing former boss of A2 Milk in Asia, Peter Nathan, as the company’s new chief executive.

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“I wouldn’t press the green light if I wasn’t confident,” Carr said of her campaign to overhaul the business she founded 18 years ago from the outside. Carr is the company’s fourth-largest shareholder.

The first hints of relationships souring at Bubs emerged in April, when then-chair Dennis Lin was demoted from his executive chairman role to non-executive director. In a sign of support for Lin, Carr took to LinkedIn to call him the “smartest, most strategic person” she ever met. She then started a period of personal leave.

On May 10, the Bubs board told investors it had terminated Carr’s position as chief executive, due to “failure to comply with reasonable board directions”.

The tensions haven’t helped the company’s share price, which closed at 18 cents on Thursday, at its lowest point so far this year. The stock has declined by close to 70 per cent over the past 12 months.

In a statement to the ASX on Friday, Bubs Australia confirmed it had received a request for the directors to hold a general meeting, from shareholders who hold around 5.04 per cent of the company.

“Under the terms of the Corporations Act, the company must call a meeting within 21 days of receiving the request, and hold the meeting within two months.”

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