Retail Food Group set to tap shareholders

Retail Food Group shares have been placed in a trading halt as the embattled Donut King and Gloria Jeans owner tests shareholder appetite for an equity raising.

Retail Food – which has suffered huge losses amid wide-ranging reputational and regulatory issues over the past two years – said last month it was considering tapping investors to help it out of the financial mire.

The Michel’s Patisserie, Brumby’s, and Pizza Capers franchisor said it had halted trading on the ASX before Friday’s open to undertake a bookbuild to gauge demand for a possible institutional placement.

Shares in the company were last trading at 17 cents, up from an historic low of 12.5 cents in June, though still a fraction of the price before it was decimated by a series of damaging accusations and management changes.

The company’s shares had been worth more than $7 at the start of 2017 and were still valued at $4.40 in December that year, by which time it was facing questions over its treatment of franchisees.

A parliamentary inquiry this year said its management had been either “unethical” or “incompetent”.

The company slumped to a $150 million loss in FY19 after another horror year, driven by $185.3 million in impairments and provisioning expenses.

This followed an impairment-driven loss of $306.7 million the year before.

Its net debt was about $260 million at June 30, while its current market capitalisation is $31 million.

Last month Retail Food said talks were ongoing with Soliton Partners regarding a potential $160 million recapitalisation.


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