RFG has $250m in debt vs. $247m in assets (intangibles and DTA excluded per the lending rules in note 17 of the annual report). Digging deeper the $247m of assets includes $83m in trade receivables but there are $70m in trade payables so realistically if you net off the receivables vs. payables the assets would be $177m. Furthermore, of the $177m this includes $96m of PP&E (the majority of this is equipment that depreciates in value rather than assets that have a higher chance of being revalued upwards).
I'm not a bank lender but $250m in debt vs. this depreciating low asset base in a challenging retail environment would set off a few alarm bells, to say the least. Look at what happened to Dreamworld with the negative media coverage and their ability to drive income through the doors. This coverage will not encourage new franchisors which are further nails in the coffin. SELL.
RFG Price at posting:
$1.98 Sentiment: Sell Disclosure: Not Held
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