Lifestyle company Wellness and Beauty Solutions (ASX: WNB) has confirmed it will produce its new range of MICRO19 hand sanitiser products in collaboration with private companies Piggott Investments and Glegra.
The three companies have signed a binding heads of agreement to enable scaled-up production to meet the strong growth and expected long-term demand for quality, efficacious hand sanitisers, which contain ethanol and meet World Health Organisation standards.
Under the terms of the agreement, Wellness and Beauty Solutions will own 50% of the joint venture and retain management rights, while the other two companies will have 25% each.
Wellness and Beauty Solutions will be entitled to a management fee of $125,000 in the first quarter of operation and $80,000 per quarter thereafter.
It will also have a call option to acquire the interests of Piggott and Glegra at fair market value, exercisable only after two years.
Initial joint venture funding will come from a $330,000 debt facility provided by Glegra to facilitate the rapid scale-up of production to meet current and future retail orders.
Glegra will retain the first right of refusal to provide any further debt funding.
Wellness and Beauty Solutions managing director Christine Parkes said the rapid spread of COVID-19 had created a shortage of quality Australian-supplied ethanol needed for the manufacture of hand sanitiser.
“The company used established industry contacts to secure an ongoing supply of ethanol… to provide a continuous supply of hand sanitiser tubes and bottles,” she said.
“Clearly there is an unwavering demand for hand sanitisers in the current environment and we are pleased to have formed a joint venture that brings together our brand development and manufacturing expertise and the expertise of plastics packaging specialists Glenn Molloy and Ralph Piggott to build MICRO19 into a trusted household name beyond the global COVID-19 pandemic,” Ms Parkes said.
The new joint venture brings together parties with combined experience in the manufacture, plastics packaging, distribution and retail of personal care products.
It will have exclusive rights to the MICRO19 product formula within Australia, including the right to sub-licence to third parties for distribution in the Australian territory.
It is expected to produce between 200,000 and 500,000 units a month across various pack sizes including 50ml, 100ml and 300ml hand sanitising bottles, as well as a 300ml room and surface spray.
The MICRO19 sanitiser range was unveiled last month and will be 100% Australian-owned and manufactured with raw materials and packaging sourced through local suppliers.
The range is believed to be effective against 99.99% of germs and was developed in response to global efforts to contain the spread of COVID-19.
Ms Parkes said Chemist Warehouse has placed an opening order for MICRO19 and there has been strong inbound demand from other Australian retailers.
At mid-afternoon, shares in Wellness and Beauty Solutions were trading 18.18% higher at $0.013.