Retail Food Group in process to raise capital to strengthen balance sheet

Highlights:

• Retail Food Group Limited (ASX: RFG) has announced that it has secured a new debt facility of AU$ 20 million ($14.6 million) from Washington H.
• RFG's placement shares are expected to be allotted and issued on 9 March and will rank equally with RFG's existing ordinary shares.
• The net proceeds of the fundraising will be used to strengthen and reset RFG's balance sheet.

Retail Food Group Limited (ASX: RFG) announced that it has received commitments to raise AU$24.9 million before costs from institutional and sophisticated investors via a placement at AU$0.08 per share.

Other than this, the Company has signed a binding term sheet with Washington H. Soul to secure a new debt facility of AU$20.0 million. RFG further aims to raise an additional ~AU$2.5 million via a Share Purchase Plan (SPP). However, it will depend on RFG’s Board’s discretion to scale back applications

and/or accept oversubscriptions subject to the ASX Listing Rules and ASIC Corporations.

RFG is a food and beverage corporation with a worldwide presence, based in Queensland. It manages Australia's most extensive multi-brand retail food franchise and possesses renowned brands such as Gloria Jean's, Donut King, Brumby's Bakery, Michel's Patisserie, Crust Gourmet Pizza, Pizza Capers, Cafe2U, and The Coffee Guy. The corporation also roasts and distributes top-quality coffee goods under the Di Bella Coffee label.

The net proceeds of the fundraising will be used to strengthen and reset RFG's balance sheet, as well as provide capital for the company to pursue core business and growth opportunities.

RFG's placement shares are expected to be allotted and issued on 9 March and will rank equally with RFG's existing ordinary shares on issue once allotted. WHSP's shareholding in the company following the placement will be about 7.97%. The new debt facility has a 3-year term and an interest rate margin of 7.5% for the first 6 months. The quarterly testing of net leverage ratio and interest coverage ratio will be required.

Eligible shareholders who were recorded at 7.00 pm (AEDT) on 2 March 2023 with a registered address in Australia or New Zealand will have the opportunity to apply for up to AU$30,000 worth of new shares at the same price as the placement. The SPP is not underwritten.

Fund Application:

As pointed out above, the fund raised will strengthen the Company’s balance sheet and help RFG to pursue growth opportunities. In this section, we will see the fund usage in detail.

Reset and strengthen balance sheet

• Early refinance of current debt to lessen refinance risk in uncertain credit markets.
• Replace present no longer fit-for-purpose amortising facility.
• Improve cash flow with non-amortising facility.
• Increase focus on growth going forward.
• Reduce leverage and maintain balance sheet flexibility.

Pursue core business and inorganic growth opportunities

• Capitalise on tailwinds in core brands via execution of “capital light” growth prospects.
• Explore inorganic prospects with striking returns.

Stock Information:

At AEDT 3:09 PM, RFG shares are trading at AU$0.078, down 8.235% from the previous close. 

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