Retail Food Group denies administration rumours
Written on the 12 March 2019 by Business News Australia
Embattled franchisor Retail Food Group (ASX: RFG) has denied reports in the Courier Mail citing "word on the street" speculation that administrators could be called in as soon as next week.
The operator of food brands including Brumby's, Donut King, Michel's Patisserie and Gloria Jeans reported a loss of $111 million for the first half of FY19 with 93 store closures during the period.
Turnaround efforts have barely cut down RFG's debt which at the end of the first half was at almost $259 million, and shares have fallen by almost a third since the announcement to $0.20 - a level that is around 17 per cent of what it was this time last year.
The group has been on the receiving end of negative media coverage over the past 12 months with claims of financial ruin amongst its franchisees, many of whom have taken up class actions against RFG.
The allegations from disgruntled franchisees include claims that RFG charges excessively high fees along with marketing and food costs. It has also been accused of operating questionable business practices, including its level of disclosure to new franchisees.
But the Gold Coast company asserts its circumstances have not yet reached the lows suggested by the newspaper's City Beat section.
"Retail Food Group Limited (ASX:RFG) notes speculation in an article published in today's Courier Mail suggesting that the RFG Board was currently contemplating the appointment of administrators to RFG," the company said in a statement.
"RFG's Board denies the accuracy of the article, and further notes that no approach was made to RFG to verify aspects of the article before it was published today."
City Beat declined a request for further comment in response.
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Business News Australia
Author: Business News Australia