Without assuming anything is a certainty, buying a business that...

Without assuming anything is a certainty, buying a business that has had 6 years of ongoing difficulties offers that rare investment opportunity: buying cheap.

l am a holder from way way back. Managed to enjoy enough of the last RFG up cycle to minimise, but not avoid, the capital destruction of the last 5 years or so.

The previous management teams ofv this business adoptedcgrowrth for growth sake instead of profit. Paid way to much for vertical integration that was never realised. Along the way, they crushed franchisees, nmany of whom were not experienced business operators. In the end, every operation in the chain basically unravelled under the weight of massive debt that could not be serviced.

This is a tale that has been seen many many times over the years.

Trimming out many layers of fat, recapitalising and getting bankers to write off debt, and then refocusing on the franchisees has taken a lot of time and effort. Positive cash flow sufficient to service lower debt and meeting all covenants kept the wolves at bay. However, SP was range bound for all that time.

For me, the critical turning points that saw me re-engage was the management turaround ream, the settling of claims with franchisees and the ACCC and very importantly, the recent refinancing and equity raise supported by the Washington Soul Patt group and the freeing up of cash flow to pursue new growth opportunities.

Individually and collectively, these long awaited events have been game changers for RFG leading many here, including myself, to double down and triple down existing stakes.

The first signs of market recognition of this "new" business model are starting to show with the share price recovering (somewhat). You know sentiment is non existent when the share price retreats to 4c after an 8c placement and debt restructuring.

After more than 40 years of investing, l still get a little excited when both markets and the media are unable to spot a genuine turnaround story. This one is not quite Newscorp in the early 90s, nor do l expect it to come close to that 100x outcome, but it the same story in a different scale.

l am hoping many long term holders have had a chance to average down their holdings to at least be in sight of a break even outcome. After once believing l was holding a lottery ticket on the Titanic, l am extremely grateful to have had enough patience and capital to have a high single digit average purchase cost. This has cost me an awful packet to achieve, mostly over the post CR timeline, and has demanded the occasional rebalancing to legitimately crystallise pretty large CGT losses.

l believe that is now history. The entire business from head office to shop floor looks to be reinvigorated as well as recapitalised, evidenced by the acquisition of Beefy's with the prospect of part of the purchase price settled in equity instead of cash. That speaks volumes of the confidence of the vendor family.

The pieces are now in place for this business to create shareholder value again. Though there is still the not minor hurdle of continuing to execute well in a slowing economy, l think the next 12 to 18 months will bring smiles to the faces of many here.

I don't expect a PE offer is what Sol Patts are after, but l would not eliminate a serious bid from being made a little after the Beefy's results become clear and sustainable. Although the share price will not really impact my net position, l have never liked making investment mistakes. I am bullish that before 2024 us over, we will have a share price well into the teens, possibly higher (excluding what l consider an inevitable share consolidation).

Hang on to your hats. This roller coaster may finally be fun.

GLTASH

PS l added more early today at 7c, as funds reposition their holdings for the next 12 months