AFR: Retail Food Group upsizes capital raising to $190m

After annoucing plans last Friday to raise $160 million, Retail Food Group said on Tuesday it planned to raise $190 million, $170 million of which will be fully underwritten by Petra Capital and Shaw and Partners.

Retail Food Group is attempting to raise $160 million to recapitalise its balance sheet.  

RFG will raise $170 million through a share placement of 1.7 billion shares at 10¢ a share, a massive 41.2 per cent discount on the closing price of 17¢ on Friday.

This is $20 million more than the 1.5 billion share placement announced on Friday.

It plans to raise another $20 million – $10 million more than originally planned – through a non-underwritten share purchase plan for retail investors.

Fund manager Invesco, which is RFG’s largest shareholder and currently holds a 14.5 per cent stake, has agreed to subscribe for enough new shares to lift its stake to 19.9 per cent.

The proceeds of the upsized capital raising will be used to pay down $118.5 million of  RFG’s $260 million of debt, which was due for refinancing this month, and provide working capital.

RFG’s banks have also agreed to write down $72 million of debt as part of a new $75.5 million loan maturing in November 2022.

RFG shares emerged from a two-day trading halt, falling as much as 20 per cent before closing down 15 per cent at 14.5¢, above the theoretical ex-rights price of l0.68¢.

While the capital raising will help stabilise the business and reduce net debt to about $54.6 million, it will significantly dilute existing shareholders, who have seen the value of their shares plunge from almost $7 three years ago.

Source: The Australian Financial Review