RFG capital raising versus asset sales

I am not currently a holder but have been looking closely at RFG for the past couple of weeks. I was interested to read media coverage that a capital raising couldn't be achieved without an asset sale. An asset sale should help but my concern is that attempting to fire sale your best assets when you are levered at >5x debt to EBITDA* , the asset sale process would likely mean a poor price and not much deleveraging (I can't see many of the group's assets getting more than 6-7x EBITDA at best while the buyer knows they are desperate).

*this conservatively assumes H2 EBITDA is annualised to give a FY EBITDA of c$52m.


Accordingly, my strong preference would be to do a c$50m capital raising. If they did this at a 30% discount (about 35c per share), this would result in shares on issue increasing to about 325m shares. Most importantly, assuming group EBITDA can be sustained at or above $50m, it should allow debt to EBITDA to be reduced below the 4x covenant, with ongoing cash generation available to fund ongoing restructuring, store closures etc. This would then provide breathing space to execute an orderly sales process of some of the weaker assets. In my view, this is much better than selling valuable assets like the coffee business on the cheap.
Interested in others view on this.