Too big of a slice; RFG refutes Crust valuation

Retail Food Group (RFG), the franchisor behind brands Donut King and Gloria Jeans Coffees has confirmed that while asset sales are being explored, the reported $100m price tag on its Crust Pizza chain empire is grossly inaccurate.

On Monday, the Australian Financial Review (AFR) reported that PAG Asia Capital was firming as the favourite to purchase the Crust brand at auction as RFG desperately tries to reduce its crippling debt.

In a statement released to the ASX however, RFG revealed that no binding agreement had been made, stating the $100m valuation of Crust exceeded the franchisor’s expectations.

“The company confirms, as previously announced, that it will be seeking to reduce its debt by various means, including the investigation of the possible sale of assets,” the statement read.

“That process is ongoing, although no formal binding agreement has been reached with any buyer at this stage in respect to any of RFG’s assets. Insofar as an amount for the sale of Crust Gourmet Pizzas is speculated in the AFR article, that amount exceeds RFG’s expectations as to the sale price for that assets if it was to be sold as a part of that process.”

Initially, the reports of a potential sale had lifted RFG’s share price, which has suffered a sharp fall over the last 12 months, driven by the announcement of store closures following a $306.7m full-year loss, allegations of misleading behaviour and a re-shuffle of its executive team.

In December, RFG CEO Richard Hinson stepped down after less than a year in the top job, putting recently announced chairman and turnaround specialist Peter George in charge of the ailing company.

Hinson had previously told investors that 2018 had been a “tough year”, insisting the company “start looking toward the future”.

As part of RFG’s continuous disclosure obligations, any sale of assets or steps taken to reduce its debt must be announced to the market.