Lawsuits cloud outlook
Class actions weigh on Retail Food Group
QUEENSLAND food franchisor Retail Food Group may be focused on preparing its fullyear results, but all eyes remain fixed on the progress of class action lawsuits against the company.
The Southport-based company has failed to provide earnings guidance for FY19, following a disastrous halfyear net loss of $111.1 million.
Further clouding the picture for the company is the announcement last month that it had received a $160 million recapitalisation proposal from Hong Kong investment firm Soliton Capital Partners. That offer, which is subject to due diligence, would enable the company to pay down its enormous $260 million debt pile.
News Corp attempted to find an analyst to comment on the prospects for the Donut King owner for its full-year results expected to be released by the end of next week.
However, only one analyst could be found – Shane Bannan of Sydney-based Bligh Capital.
Mr Bannan said it was too difficult to voice any opinion on RFG’s financial performance due to the threat of the class action lawsuits hanging over it. They include Corrs Chambers Westgarth investigating a possible class action on behalf of former and current Michel’s Patisserie franchisors believed to involve a claim amounting to tens of millions of dollars
“It is in the lap of the gods as far as the class action lawsuits go,” Mr Bannan said. Chief executive Steve McCann called it a challenging year for Lendlease but was optimistic
“This is no longer an investment-grade stock. The stock price could go to zero or up by a factor of four or five, but it all hinges on how these class actions go.”
It comes as RFG was forced to defend accusations it sent demands for unpaid fees to Michel’s Patisserie owners just days before a crucial class action meeting on the Gold Coast.
Corrs Chambers Westgarth last week organised a meeting at the Labrador Community Centre as part of the law firm’s roadshow for its class action.
It commenced the possible class action against RFG last month on the basis it acted unlawfully when the company sold Michel’s Patisserie franchises. The firm said former or current franchisees, who have suffered loss or damage, may be entitled to compensation as a result.