Is there liquidity risk here? I don't see it but someone please help make the argument.
They cover interest payments 10x from EBITDA. If they cut sales by 50%, they cover interest 5x. Their business model takes a percent of sales, so no matter how profitable the franchisee are, RFG is going to have a very high margin and profitable business at almost any run rate.
The only angle on liquidity I can see is that they if someone could litigate that they have been using unfair contracts and attempted a class action on behalf of all franchisees, the award from that could significantly burden the business with a long-term obligation, and at that point they might intentionally bankrupt the business and attempt to reorganize. I don't know Australian administrative law. Is something like that possible. It could happen in the US.
Liquidity Risk?
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Mkt cap ! $171.8M | |||
| Open | High | Low | Value | Volume |
| 6.8¢ | 7.0¢ | 6.7¢ | $397.9K | 5.845M |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 1 | 208459 | 6.9¢ |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| 7.0¢ | 668943 | 8 |
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| Last trade - 16.10pm 02/05/2024 (20 minute delay) ? |
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6.9¢ |
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| Open | High | Low | Volume | ||
| 6.8¢ | 6.9¢ | 6.7¢ | 1103909 | ||
| Last updated 15.43pm 02/05/2024 ? | |||||
| RFG (ASX) Chart |