Tony Perich to back Freedom Foods raising?

Tony Perich speaking at Oran Park in Sydney.

Further details are emerging about the equity raising plans for Freedom Foods, with some suspecting that the company could wind up being privatised by its billionaire shareholder Tony Perich.

DataRoom reported on Thursday that the company is expected to launch an equity raising to secure at least $100m as it works with its advisers Moelis, PwC and Ashurst to assess its financial situation.

It comes after the sudden departure of chief executive Rory Macleod and chief financial officer Campbell Nicholas and after the company made additional writedowns to its stock, which were unexpected.

The latest suggestions are that an equity raising will be fully underwritten by the company’s 54 per cent shareholder, dairy billionaire Tony Perich and the Perich family.

Shares in the equity raising are expected to be sold at around the company’s last traded share price of $3.01.

A dilemma for fund managers who hold shares in the stock has been the price at which they should value Freedom Foods in their portfolios.

This is given a raising is on the cards and they are typically undertaken at a discount to the last traded share price of the stock.

It is understood that the company has given itself until October to tap the market, but many anticipate an equity raising will happen next month.

The understanding is that Freedom Foods will not announce any further writedowns when it hands down its full year results in the days ahead.

But mystery still surrounds why the company announced larger-than-expected write downs to its inventory and why the CFO and CEO have abruptly left.

Mr Perich and his family will take up their allocation for the raising, and should there be a shortfall due to other investors being hesitant to participate, they would also buy up additional shares in support.

Some suspect that the ulitmate outcome is that the company is delisted and folded into Mr Perichs’ privately held empire.

 

Freedom Foods is best known as a producer of soy and dairy products and owns factories in Ingleburn and Shepparton.

The shares in Freedom Foods have not traded since they fell 21 per cent on an announcement on June 24 that Mr Macleod was on leave and were placed in a trading halt while the company “considers its financial position”.

On June 25, Freedom revised the write down of its inventory from $25m to $35m to reflect provisioning for obsolete and out-of-date stock and product withdrawals, bringing total stock write downs to $60m for the 2020 financial year.

Mr Gunner said the issue was identified as stock was moved from five external warehouses to the company’s own facilities.

Mr Macleod has resigned from the company, which has also terminated 61 positions, resulting in 41 redundancies.

Citi analysts had earlier said that the company’s net plant and equipment was worth $589m.