Retail Food Group’s Share Trading Under Surveillance By ASIC

Retail Food Group Share Trading Under Surveillance By ASIC

Retail Food Group (ASX: RFG) is under the corporate regulator’s surveillance . The ASIC is keeping a watch on the share trading of Retail Food Group, as the shares of the company zoomed up from 16 cents to 24 cents in the last week. The rise in the stock represents a 50% increase in the share price. The reason for keeping an eye on the share trading was that the shares increased by 50% before the big announcement regarding the debt covenants followed by the waiver of a restructuring review. As per reports, the Australian Securities and Investments Commission were monitoring the share trading of RFG, particularly around important announcements.

Yesterday on 3 April 2019, the company provided an update regarding the potential sale of its Donut King and QSR division. The announcement also highlighted that the negotiation with the potential buyers regarding the sale process that was under process has now ended. The party could not reach the formal binding agreement which the board considered were in the best interest of the company. However, much before the announcement, the shares of Retail food group reported a fall in its share price by 6.5%. At present, the company is exploring a number of other option by which it can reduce its $260 million debt which includes the potential sale of assets. The company will soon be providing an update to the market in case it reaches any definitive option.

However, according to reports, the Retail Food Group management stated that there will be no bearing on the company’s new agreement with lenders with the failed asset sales. Besides, Retail Food Group on the other hand will continue to work closely with the lenders so that they are able to maintain their support.

According to the final parliamentary inquiry report, it was highlighted that Retail Food Group has damaged the reputation of the entire franchise industry and recommended for the corporate and competition watchdogs investigate the company’s behavior. It also recommended for the tax office investigation for possible insider trading breaches of market disclosure obligations and tax avoidance.

On 15 March 2019, as reported by Federal Parliamentary Joint Committee on corporation and Financial Services on the release of the “Fairness in Franchising” stated that the company was studying the details and the report and is ready to support any changes that will benefit the franchising industry. Peter George, who is the executive chairman of RFG stated that the existing management team of RFG understands the future success of the company is directly related to the profitability of its franchisees, and they have started a comprehensive investment program. They have also begun to materially help the existing as well as the new franchisees grow and flourish.

RFG also stated that the board of the company is not aware of the recent examinations about the share trading and it continued to work with all the relevant regulators that were in the best interest of its shareholders.

The shares of RFG closed at A$0.215 (As on 4 April 2019), down by 10.417% as compared to its previous closing price. The company has a market capitalization of A$43.86 million and approximately 182.75 million outstanding shares.


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