Retail Food Group shares slump on reopening of trade following $170m fundraising announcement
Shares in Southport franchisor Retail Food Group slumped by more than 26 per cent after a trading suspension was lifted this morning - but the company had some good news to share.
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SHARES in Southport franchisor Retail Food Group slumped by more than 26 per cent after a trading suspension was lifted this morning.
Shares in the company were at 17c last before trading was suspended last week ahead of a 10c per share capital raising announcement.
It fell to touch its all-time low of 12.5c before regaining some ground to trade down 14.7 per cent at 14.5c.
RFG launched a $150 million institutional share placement on Friday, as well as a $10 million share purchase plan, on Friday and announced it had been given another lifeline from its lenders, to which it owed $262 million that was due for repayment at the end of the month.
The company announced its instutional placement had reached $170 million, and upped its share placement plan to target another $10 million, taking its total fundraising endeavour to $190 million.
Executive chairman Peter George said there had been strong interest in the capital raising.
“We are delighted with the support received for the placement, and welcome a number of highly credentialed and supportive institutional investors to the shareholder register,” he said.
“The board would like to thank its existing shareholders, franchisees and other stakeholders for their ongoing support throughout the recapitalisation and restructuring process.
“The recapitalisation is transformational for the RFG business and will allow the RFG team to continue to harness the underlying value of the franchise network and enhance franchisee profitability.”
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The company behind Donut King, Gloria Jeans and Pizza Capers struck a debt restructuring deal with its lenders, which extended the deadline to February 28, agreed to write off $71.8 million of existing debt, and to provide a new $75.5 million loan facility to refinance remaining debt.
It said $118.5 million of proceeds from the $170 million share offer would go to the lenders.
Announcing the launch, RFG also unveiled an underlying net earnings guidance of $42 million to $46 million for the current financial year.
The guidance does not take into account new accounting standards on reporting lease liabilities and recording of revenue from customer contracts.
In its investor presentation for the placement, RFG said it was likely to close another 130 stores this financial year, and that it had 96 stores in Australia that were not currently trading, placing more pressure on the dwindling earnings.
RFG said the share placement, to sophisticated and professional investors, had the ability to accept oversubscriptions.
Petra Capital and Shaw and Partners will act as joint lead managers and joint bookrunners to the placement while Aitken Murray Capital Partners is acting as co-lead manager.
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