Australian (ASX) Stock Market Forum

RFG - Retail Food Group

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greggles said:
I just noticed RFG was removed from the S&P/ASX 300 Index last week.

Strangely, this morning a Change in substantial holding notice was released that revealed Invesco Australia Limited had increased its holding in RFG from 12.298% to 13.385% on 07/09/18. I wonder why they would increase their holding on the same day that RFG was removed from the S&P/ASX 300 Index? :confused:
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The datafeed on ASX300 didn't get updated on their system yet?

What a scam these managed funds are. Taking people's savings and just randomly spreading it every freaking where.
 
RFG hitting new lows over the last week as the share price dips below the 40c level. Currently at 36.5c.

big.chart-RFG.gif
 
greggles said:
RFG hitting new lows over the last week as the share price dips below the 40c level. Currently at 36.5c.

View attachment 90141
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They have a lot of issues. Can they sell off some assets and reduce the debt? Can they get out of some leases?

Being declared insolvent is not out of the question. The bargain hunters pushed the price up as per usual after the big fall but now reality is setting in.

It all depends on the next six months.
 
Knobby22 said:
They have a lot of issues. Can they sell off some assets and reduce the debt? Can they get out of some leases?

Being declared insolvent is not out of the question. The bargain hunters pushed the price up as per usual after the big fall but now reality is setting in.

It all depends on the next six months.
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At this point the debt is multiples of the value of any equity in the company, meaning it could sell the entire company and still not make much dent in the debt. So no. I don't think selling of its most profitable brands is going to be a solution here, and I dare say any lender might have some restriction over them selling cash generating assets as well.
 
The AFR is reporting that RFG is in talks with PAG Asia Capital regarding the possible sale of Crust Gourmet Pizzas. RFG released the following announcment this morning in response to the speculation:
Retail Food Group Limited (ASX:RFG) notes the comments in today’s Australian Financial Review
regarding the potential sale of assets by RFG, including Crust Gourmet Pizzas. The company confirms, as previously announced, that it will be seeking to reduce its debt by various means, including the investigation of the possible sale of assets.

That process is ongoing, although no formal binding agreement has been reached with any buyer at this stage in respect of any of RFG’s assets.

Insofar as an amount for the sale of Crust Gourmet Pizzas is speculated in the AFR article, that amount exceeds RFG’s expectations as to the sale price for that asset if it was to be sold as a part of that process.

RFG will keep the market informed of any sale of assets or other steps taken to reduce its debt in accordance with its continuous disclosure obligations.
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In order to survive it is imperative that RFG reduce its debt load. Although selling off assets is a double edged sword. Buyers will only be interested in the best performing brands, leaving RFG with the leftovers. Still, it appears that RFG has been backed into the corner and now must sell assets to pay down debt.

This morning's announcement has given RFG a small bounce, up 11.9% to 33c.
 
Well greggles, if they get a decent price as rumoured and the turn around specialist is effective then maybe there is a future. I saw the rumoured buyers own The Cheesecake Shop chain.
Brave to buy shares now though.
 
Knobby22 said:
Well greggles, if they get a decent price as rumoured and the turn around specialist is effective then maybe there is a future. I saw the rumoured buyers own The Cheesecake Shop chain.
Brave to buy shares now though.
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I agree. They will need to get a good price. The problem is when your back is up against the wall, it doesn't leave you in a good negotiating position. Of course, RFG don't have to sell if they don't get the price they want. But I suspect that PAG Asia Capital will be looking to get a bargain given that RFG is in a difficult financial position. What smart buyer doesn't want to take advantage of a distressed seller?
 
Embattled Retail Food Group slumps further

Struggling Gloria Jeans and Donut King operator Retail Food Group has slumped to an $111 million first half loss as cafe sales dive, outlets are shut, and poor press clings to franchise opportunities.

Profit at the Brumby's Bakery, Crust, and Michel's Patisserie owner fell by 25 per cent for the six months to December 31 following $123.7 million in impairments, write-downs and provisioning, while total revenue dipped 3.4 per cent to $170 million.

The company said full-year earnings are expected to slide by at least a 32 per cent.

Retail Food Group has struggled financially since accusations in late 2017 that its franchisees had been run into the ground with exorbitant fees, high marketing and food costs, poor quality food and a lack of support.

The company registered a $306.7 million full-year loss in FY18 and accelerated its store closure program in August. More...
 
Retail Food Group publicly denies media speculation in The Courier Mail that the RFG board is considering appointing administrators to the company.
12 March 2019

MEDIA SPECULATION INACCURATE

Retail Food Group Limited (ASX:RFG) notes speculation in an article published in today’s Courier Mail suggesting that the RFG Board was currently contemplating the appointment of administrators to RFG. RFG’s Board denies the accuracy of the article, and further notes that no approach was made to RFG to verify aspects of the article before it was published today.
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RFG now under 20c and seeing serious dumping this month following the release of its 1H19 Financial Results on 28 February.
 
Retail Food Group hoses down concerns it is in financial strife, but regulators could start circling.
Key points:
  • Retail Food Group has defended its financial position, saying it is in dialogue with its lenders
  • The company been accused of continually opening new outlets, some of which were unlikely to be viable, to profit from upfront fees
  • A parliamentary inquiry said there had been a "lack of comprehensive, systemic and forensic investigations by the regulators" and wants them to now act
https://mobile.abc.net.au/news/2019-03-15/rfg-hoses-down-concerns-it-is-in-financial-strife/10902194
 
Noticed there's a lot of buyers lined up for ~ 2 million shares in the 15 - 16 cent range, plus however many more sitting on the sidelines.

Assuming they don't suddenly disappear it would take a bit of effort to go meaningfully lower from this point, at least in the short term. :2twocents
 
I find the concept of asset sales of companies in difficulty interesting. Usually the scenario is that the only assets anybody is willing to buy are the profitable ones and for a bargain basement price. Then the company is left with stuff that doesn't generate a worthwhile income and they go down anyway.
In the case of RFG, no way can they realise enough funds from asset sales and still have a viable business.
 
Country Lad said:
In the case of RFG, no way can they realise enough funds from asset sales and still have a viable business.
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I follow your thinking but then the price was up over 20% on Friday so someone thinks there's a good deal here.

Whether that someone is right or not is another matter.....

I do not hold. :2twocents
 
Up nearly 100% in 2 days!
Strong volume. More volume today already than the big total volume Friday.
On a Monday it matters more to me because people have the weekend to chill and so what they got carried away with last week often does the same (chills on Monday morn). Not RFG today.
Somethings up!

Here's my stab in the dark-
Who ever walked away from trying to buy Donut King off them is maybe buying up shares in the whole company which is probably cheaper than what RFG wanted for Donut King.
They could have a crack at all of RFG, but if they are smart they would sit back after taking a stake. Let if fall again then have a crack at it. Given the covenants have been liberated to some degree there is less risk of a default, so sitting on some stock is less risky once they get a mouthful.
Noting that it also kicked off at these levels on the 28 March with big volume
 
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Well there you have it. No real reason for the shareholders to be happy. My emphasis.

"It is understood the funds were recently told their proposals were no longer being considered as it was now dealing exclusively with a local fund, Soliton Capital.

Soliton is backed by Hong Kong based SSG Capital Management and it is talking to RFG about becoming a strategic investor.

Equity investors are expected to face a heavily dilutive capital raising.

That sounds like something the ASX and investors might have thought worth knowing about in light of the recent share price movement. The reality is the deal is at a stage where it shut down talks with other serious players.

The speculation is Soliton could inject $100 million - or more - into RFG to help pay down its $260 million pile of bank debt which is due to be refinanced in the third quarter of the year and which the banks are understood to have been eager to reduce their exposure.

Under the deal the banks would get 100 cents in the dollar. Equity investors, on the other hand, would face a heavily dilutive capital raising, with Soliton emerging as the dominant shareholder and existing shareholders virtually diluted out of existence. The only asset for sale is Dairy Country, which is likely to fetch $20 million. The other businesses such as Pizza Capers and Crust, have struggled to find a buyer."
https://www.theage.com.au/business/...-not-let-the-market-know-20190709-p525j5.html
 

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