I like RFG, page-59

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AlCp

26,797 Posts.

1737

02/09/19

16:46

Post #: 40279831
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Originally posted by Galilee13 ↑

Sorry AICp. I think you are getting way ahead of yourself.

The business has not stabilised yet. Still closing stores at a huge rate. But more importantly next to NO NEW stores being opened. So one can only assume that this is continuing to happen. RFG doesn't tell you how many stores are up for renewal in the next 12 mths.

This thing is a long way off stabilising. My guess is at least another 2 years min as all the current disgruntled franchisee leave. But they need new blood to come in and open new stores now, which is not happening. They can close all the underperform stores, but they need new franchisees.

What's the current revenue run rate based on the stores open TODAY? That's what banks and investors will be looking at.

Then they have the massive task of rebuilding the brand. That will take another few years.

During the last half they didn't pay back any principal, in fact they increased borrowings. Therefore assuming the current run rate they are not doing a very good job of keeping the banks happy.

Best case this is a 3 to 5 year turnaround assuming banks are on there side and they can reduce debt via asset sales. They had years to pull the trigger on a capital raising at higher price but didn't. A capital raising at or below current levels is more likely given there dire situation.

Banks agreed to an extension largely because they would get some funds from any asset sales. Company states it has asked the banks for another extension as it can't sell any assets nor raise capital (debt or equity).

Your right, it's in the hands of the banks. They have about 7 weeks to go until the loans are called in.

Even if banks agree to an extension it's still won't change anything. As per my comments at the top it's will take years for the business to stabilise and banks know this.

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It's seems to be stablising and I agree they will need a few more years until they are fully recovered such that their intangible assets (franchise brand) would be worth anything to sell, right now it's not worth that much/at all to the banks if they call in the loan and they know this, just collect their $30M in interest for the next few years......and I think you mean if the loans are called in.

RFG Price at posting: 17.5¢ Sentiment: Buy Disclosure: Held
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I like RFG, page-59

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