Retail Food Group renegotiates with lenders

By Sarah Stowe | 02 Apr 2019 View comments

Retail Food Group renegotiated its financial covenants with lenders and has avoided a potential financiers’ review set to occur some time after February 28.

Retail Food Group renegotiates

This is the fourth such escape over the last year for RFG, with waivers in June and September 2018. The company received a late Christmas present with news of a waiver for the period to December 31 2018 that put the debt testing on hold.

The franchisor said its financial covenants have been reset for the period ending March 31 and will apply to the balance of the loan to October 31.

The embattled franchisor said this will not impact guidance for FY19 underlying EBITDA.

RFG currently expects this to be in the range of $43m to $48m, assuming full-year contributions from all business units and the realisation of forecast annualised restructuring benefits.

Retail Food Group debt

RFG is still considering ways to reduce its debt, such as equity and other debt funding options, as well as potential asset sales.

The company previously said the sale of its pizza and sweet-treat brands Crust, Pizza Capers and Donut King could help it pay down its debt quicker.

Just a year ago RFG warned it would close up to 200 stores. Then headed up by MD Andre Nell, the business has since undergone a change of chiefs with Richard Hinson lasting less than 12 months as CEO before current incumbent and chairman, turnaround expert Peter George took the helm.

Since then the multi-brand franchisor has cut jobs in a departmental shake-up as part of its turnaround strategy. The business reported a $111m loss in February 2019.