Lifeline for RFG gets the tick of approval

THE board of embattled Gold Coast franchisor Retail Food Group can breathe a sigh of relief after shareholders yesterday approved a major restructuring of its finances.

The Donut King and Pizza Capers owner, which carries $262.8 million of debt, last month announced a placement of 1.7 billion shares at 10¢ a share to raise $170 million from institutional and sophisticated investors as part of a recapitalisation plan.

It said $118.5 million of the proceeds would be used to pay back its main lenders Westpac and NAB, which had also agreed to wipe off $71.8 million of debt and provide a new $75.5 million facility through to November, 2022 to refinance the remaining debt.

At the same time RFG also announced a share purchase plan for retail investors to raise an additional $20 million.

RFG’s main shareholder Invesco, which has a 19.9 per cent stake, would have its holding “topped up” to maintain its position.

Yesterday the company said shareholders, who attended a meeting on the Gold Coast, had approved the deal, which is crucial to turning around the company’s fortunes.

RFG’s shares have received a battering since allegations rose in 2017 of mistreatment of franchisees.

In November, prior to damaging media reports, shares were above $4.46. This year they have fallen to as low as 12.5¢. Shares closed yesterday steady at 13¢.

RFG was savaged by the joint parliamentary inquiry report into the franchise sector earlier this year, which found it had bled franchisees dry with an unjust business model.