Retail Food Group: shareholders to get say on $170M capital raising at AGM next month

Shareholders in embattled food franchisor Retail Food Group will have their say on the company’s plan to raise $170 million to recapitalise the company at next month’s annual meeting.

Retail Food Group shareholders will vote on a new plan to recapitalise the company next month. Photo: Kathleen Skene

SHAREHOLDERS in embattled food franchisor Retail Food Group will have their say on the company’s plan to raise $190 million at next month’s annual meeting on the Gold Coast.

The Southport-based company yesterday released its annual report ahead of its AGM on November 29 at RACV Royal Pines.

Shareholders will get the chance to vote on a motion seeking approval to raise $20 million from a share ­purchase plan in addition to a further $170 million raised from sophisticated investors.

RFG has a $262 million pile of debt. Photo: iStock

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The fund raising is designed to slash the company’s $262.8 million pile of debt to $54.6 million. At the same time it is highly dilutionary to shareholders, increasing the number of securities from 182.75 million to more than two billion.

Outlined earlier this month, the plan involves using $118.5 million of the proceeds to pay back the company’s lenders, NAB and Westpac.

RFG said its banks had then agreed to wipe off $71.8 million of debt and provide a new $75.5 million facility through to November 2022 to refinance the remaining debt. A payment deadline from its lenders set for October 31 was extended to February 28, 2020, to enable the offer to proceed.

Retail Food Group’s annual meeting will again be held at RACV Royal Pines in Benowa. Photo: Kathleen Skene

The institutional component of the share placement was completed earlier this month and fully underwritten by Petra Capital and Shaw & Partners.

Meanwhile, RFG is also facing possible class actions from law firm Corrs Chambers Westgarth on behalf of former Michael’s Patisserie franchisees and Phi Finney McDonald for a separate action.

RFG said in its annual report no claim had been lodged nor had any legal firm been in contact with the company.

Former RFG CEO Tony Alford and executive Alicia Atkinson appear before the joint parliamentary inquiry into the franchising sector held last year.

“It is currently not possible to determine whether the threatened actions will result in legal proceedings and what the financial impact of them, if any, may be for the group in the future,” the annual report reads. “In the event legal proceedings are initiated, the group intends to defend its position.”

RFG said it is co-operating with the Australian Competition and Consumer Commission and Australian Securities and Investments Commission for their investigations into whether the company breached Australian Consumer Law and the Corporations Act.

Shares were flat in early trade this morning at 14.5¢.