"The debt isn't overly worrying, considering there is cash in the bank, not a lot - but it is there, and there are still EBIT contributions."
The debt is very worrying. RFG has made it very clear they're at the mercy of their banking syndicate, and its capital structure will need to change one way or the other (either via an equity raise, or asset sales), even if they don't blow through the 3x EBITDA covenant (which i think they will). This is why the company is trading on superficially very cheap multiples (~5x EBITDA, assuming they can get close to the $90m FY19 EBITDA target, which they won't) - everyone knows a heavily discounted rights issue or other dilutive event (e.g. asset firesale) is coming, because the company has next to zero chance of complying with its reformulated banking covenants.
RFG Price at posting:
$1.14 Sentiment: None Disclosure: Not Held
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