RFG shares rise despite asset sale collapse

SHARES in Southport franchisor Retail Food Group Limited plummeted, and then recovered after it announced crucial negotiations to sell off its Donut King and pizza brands had collapsed.

In a statement to the ASX yesterday, RFG said discussions with the potential buyer, which the Bulletin understands was Asia-based private equity group PAG, had ended as the offer price was too low.

“A formal binding agreement could not be reached with that party on terms which the Board considered were in the best interests of the company as a whole,” the company said. Shares in the company had dived 7.83 per cent from open to 21.2c by 2pm but rallied to finish the day’s trading at

24c..

RFG had valued its Donut King, Pizza Capers and Crust brands at $87.34 million after lease liabilities of $45.79 million.

Executive chairman Peter George said the doughnut and pizza brands “continue to provide solid earnings contributing to the company’s underlying profit”.

“The potential sale of any of these assets must be at a price not only acceptable to our Board but in the best interests of our shareholders.”

The company received good news last week when its lenders, NAB and Westpac, agreed to provide a waiver for a key financial review that has hung over the company since the end of February.

RFG owes more than $250 million and the waiver was crucial to enable the company to continue as a going concern.

RFG yesterday said it “continues to explore a number of options to reduce its debt, including the potential sale of assets”.

RFG shares had climbed as high as 27.5c last week, rallying

sharply from 16c the week before after speculation another of its assets, Dairy Country, was also on the table to be sold.