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LEGAL | Staff Reporter, Australia
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Retail Food Group renegotiates debt covenants with bankers

The franchisor previously forecasted between AU$43-48 million in underlying EBITDA.

Retail Food Group (RFG), the owner of brands Donut King, Gloria Jean’s Coffees and others, has renegotiated its debt covenants with National Australia Bank and Westpac.

Its board, led by executive chairman Peter George, said in an ASX announcement that the company also received a waiver of the restructuring review.

RFG said its covenants relating to operating leverage and interest cover ratios have been reset and will now apply for the balance of the facility term to October 31, 2019.

The company’s debt reduction programme was subject for review by lenders after the half-year results on February 28 and covenants under a AU$285 million senior debt facility was due to be tested on March 31.

RFG also said its FY2019 earnings guidance will accommodate the reset covenants. The company previously forecasted between $43 million and $48 million in underlying EBITDA, down from $71.4 million in 2018.

RFG has been in talks to sell its Donut King, Crust and Pizza Capers brands so it can pay down its debt faster, and has said it was considering equity and other debt funding options.

The company, which reported a AU$111 million half-year loss, was recently singled out in a report resulting from a parliamentary inquiry into franchising.

(Also read: Franchising inquiry report: reactions from Brumby's founder, FCA, industry analysts)

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