Investors in the Youfoodz float will only claw back a fraction of their money in its $125m buyout

Spare a thought for the poor sods who bought into the disastrous float of Brisbane-based ready-made meal maker Youfoodz just over seven months ago.

Youfoodz chief executive Lance Giles.

Spare a thought for the poor sods who bought into the disastrous float of Brisbane-based ready-made meal maker Youfoodz last year.

They’re now about to be put out of their misery thanks to a planned $125m buyout by rival HelloFresh announced on Tuesday.

Assuming the conditional deal clears the usual hurdles, investors will claw back just 93 cents per share.

Sure, that’s an 82 per cent premium to Monday’s closing price of 51 cents and more than double the one-month average of 44 cents, as the company helpfully pointed out.

Predictably, the share price soared on Tuesday and it closed at 90.5 cents.

But Youfoodz, which only started trading on the ASX in December, raised $70m from punters who forked out $1.50 per share for a piece of the action.

Youfoodz CEO Lance Giles.

The stock has never closed higher than the issue price and there were ominous signs even on the first day of trading, when it finished at just $1.05.

Since then, it has steadily edged down, hitting a low of just 37 cents in May.

The misadventure on the ASX is just the latest headache for the problem-plagued company, which will keep trading under its current name after it gets delisted from the stock exchange and becomes a division of HelloFresh.

Even though it has piled up more than $60m in accumulated losses since its launch in 2012, Youfoodz will continue to be overseen by founding boss Lance Giles and his current circle of top executives.

Since Giles started the Virginia-based business, it has churned out more than 60 million meals for both home delivery and retail outlets.

With three facilities across Brisbane and plans for a new manufacturing plant, Youfoodz now produces more than 400,000 meals, 80,000 snacks and 25,000 drinks every week.

But it has continually lost money, including a whopping $34.7m pool of red ink in the 2019 financial year.

It reported a first-ever net profit, a very modest $2.5m, in the December half as it forecast net revenue of $150m for the year.

So, with auditors repeatedly warning of a “material uncertainty’’ about its ability to survive, how has the company managed to stay above water?

Much of that can be attributed to cornerstone investor RGT Capital, a private equity mob which injected $24m into the business in mid-2019 for a majority 57 per cent stake. It also vowed to tip in another $30m if needed.

Youfoodz was so cash-strapped before the fortuitous arrival of RGT that it had to strike payment plans with both the ATO and Office of State Revenue “to cover arrears in payroll related taxes and employee benefits,’’ according to one of its annual reports.

In case Youfood didn’t have enough troubles, it’s also been buffeted by numerous legal and industrial battles.

In the past two years alone the company has had to fend off a shareholder lawsuit, an unfair sacking claim and a dispute with a major supplier over allegedly unpaid bills.

Now it faces legal action from former chief financial officer Jennifer Lowery, who sued the company in February alleging it had failed to cough up a $700,000 severance payment.

Giles has denied any wrongdoing and Youfoodz is defending the case in the Brisbane District Court.