Freedom Foods could revalue assets

Freedom Foods Group CEO Rory McLeod. Picture: Stuart McEvoy

Freedom Foods could be making a statement in the coming days about the carrying value of its assets, say sources.

The news comes after the $975m dairy and cereal producer on Wednesday announced that managing director, Rory Macleod, was on leave pending a further announcement that is expected to be made early next week.

Only a day earlier, Freedom told the market that Campbell Nicholas resigned as chief financial officer.

The Wednesday announcement was considered unusual and sent the stock more than 18 per cent lower in morning trade before it was placed in a trading halt.

DataRoom understands that the spotlight remains on the group over the carrying value of assets and how they are capitalised.

For the 2020 financial year, Freedom Foods capitalised development costs of about $62.4m and about $171m of construction costs in the previous financial year.

The company had a plan to outlay about $160m a year on capital spending at a time that some say cashflows have been poor.

It has net debt of $300m and equity of $671m, so some expect a capital raising could be on the cards.

Sources say it is also worth noting that the number of parties shorting the stock had surged in the days before the announcement.

Freedom Foods produces a range of allergen-free breakfast cereals, such as gluten free and dairy products. Dairy billionaire Tony Perich has a holding of about 54 per cent in the company.

Apparently, some discontent started to arise about the management from the major shareholder around the end of last year.

It reported a 45.6 per cent lift in its net profit to $5.4m for the six months to December.

Wednesday’s statement said from Freedom Foods said Perry Gunner has been appointed executive chairman and commercial director Brendan Radford is now the acting chief executive.

The board has also appointed Stephanie Graham, who is the group general manager of corporate development, as the acting chief financial officer and was evaluating permanent appointment processes, Freedom Foods said.

Mr Radford is the former managing director in Australasia of Rockstar Energy Drink and has 18 years’ industry experience.