, Australia

RFG shareholders approve $170m capital raising plan

The franchisor says it is seeking to generate an additional $30m gross margin at the franchisee level.

Retail Food Group’s (RFG) plan to raise $170m as part of its recapitalisation strategy has been approved by a “requisite majority” of shareholders, the company has announced.

“Net proceeds raised from the placement will primarily be applied to repay debt, strengthen the company’s balance sheet and provide sufficient working capital to stabilise the company,” RFG executive chairman Peter George said in the company’s general meeting.

The approved $170m capital raise will be made up of an institutional placement of approximately 1,700 million ordinary shares at $0.10 per share.

Specifically, the placement will see a minimum of $118.5m to pay existing senior debt, with lenders having agreed to extinguish $71.8m worth of debt upon receipt. The lenders also agreed to a new $75.5m term loan facility maturing in November 2022.

A ‘top up’ to major shareholder Invesco, which has a 19.9% stake, was also approved.

Moreover, the franchisor, which owns Gloria Jean’s Coffees, Donut King and Michel’s Patisserie, seeks to generate an additional $30m gross margin at the franchisee level coming from “rent renegotiation and cost of goods reductions, operational improvements and improved foot traffic and sales derived from product category extensions and marketing programmes.”

RFG also announced that George will stay on as executive chairman to 30 June 2022.

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