SSG pursues recapitalization of Australia’s Retail Food Group

SSG is acting alongside its local affiliate Soliton Capital Partners. Their proposal remains subject to due diligence and is expected to include a combination of debt and equity or equity-linked components, according to a filing.

It follows a period of media speculation on RFG’s financial recovery strategy that saw shares in the company spike 57% between July 5 and July 8 to A$0.22. The stock was trading at A$0.20 as of late morning July 10, giving the company a market capitalization of around A$36.5 million.

Founded in 1989, RFG positions itself as Australia’s “largest multi-brand retail food franchise owner and a roaster and supplier of high-quality coffee products.” Operations span 2,400 outlets across Australia and internationally, with focus sectors including foodservice and related logistics, dairy processing and wholesale bakery.

The company posted a A$307 million loss for 2018, compared to a A$62 million profit the prior year, with management citing factors including difficult retail trading conditions, store closures, ineffective tactical initiatives, and a decline in new store growth. Revenue rose 7% in 2018 to A$374 million. Total debt stood at A$259 million as of February.

RFG brands include Donut King, Brumby’s Bakery, Pizza Capers, Di Bella Coffee, Crust Gourmet Pizza Bar, Michel’s Patisserie, and coffee shop chain Gloria Jean’s. In April, the company said that negotiations with a potential buyer of Donut King had been terminated without agreement. All proceeds from the proposed sale were meant to be applied to debt repayment.

Other efforts to strengthen the business in recent months include the appointment of turnaround specialist Peter George as chairman, who is expected to focus in part on technological innovation. In January, food industry veteran Richard Hinson was hired for a newly created role, chief executive of Australia, that will look at financial improvement strategies.

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• Topics
• Australasia
• Credit
• Consumer
• Restructuring
• Australia
• SSG Capital Partners
• Special Situations
• PIPE