Retail Food Group shares struck from ASX 200 as part of quarterly rebalance

BATTLING Gold Coast franchisor Retail Food Group will be struck from two key indices on the Australian Stock Exchange after three straight days of record low share prices.

RFG closed at a new low of 67 cents yesterday amid shareholder concerns the company would struggle to meet strict debt repayment covenants set by its banks. Photo: iStock

BATTLING Gold Coast franchisor Retail Food Group will be struck from two key indices on the Australian Stock Exchange after three straight days of record low share prices.

S & P Dow Jones Indices this morning said RFG would be removed from its S & P/ASX 200 index hierarchy and it S & P/ASX All Australian 200 indices as part of its quarterly rebalance.

RFG shares hit a fourth day of lows today, trading down 8.2 per cent at 2.30pm.

It closed at a new low of 67 cents yesterday amid shareholder concerns the company would struggle to meet strict debt repayment covenants set by its banks.

The Southport-based franchisor, which operates brands including Doughnut King, Gloria Jean’s, Crust Pizza and Brumby’s Bakeries, released earnings guidance on Tuesday that flagged a net loss of $87.6 million and underlying net profit after tax of $34.5 million for 2017-18.

The company has a huge task ahead in meeting its debt obligations, which require it to more than double its pre-tax earnings next financial year.

RETAIL FOOD GROUP SHARES STILL SLIDING AFTER BANKRUPTCY TALK

Richard Hinson, the new boss of troubled franchise operator Retail Food Group at the Brumby's in Red Hill. (AAP image, John Gass)

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Online forums were awash with punters urging each other to “take what they could get” for RFG shares and get out amid concerns over the strict lending covenants it was working under as its value sinks further below its $267million debt level.

Among the conditions of its extended loan terms is a requirement to meet its underlying pre-tax earnings of $90 million for financial year 2018-19 — more than twice what it expects to book for this year.

The index changes also include removal of flailing wealth management company AMP from the S&P/ASX 20 index.1

They take effect on June 18.