Shares in troubled franchisor Retail Food Group were hit for the second day in a row after it was revealed the company had a secret deal with a former staff member to manage stores.
The shares ended yesterday weak and 49% lower in two days.
RFG’s shares tumbled as much as 13% in early trading on Tuesday after Fairfax Media reported the company had not told shareholders about the deal between itself and a company run by a woman called Alicia Atkinson, RFG’s former bakery cafe director and the partner of RFG’s former longstanding CEO Tony Alford.
RFG shares fell another 12% to $1.14, extending Monday’s 37% plunge made yesterday when trading resumed after a brief suspension last week and then the release of Retail Food’s results and restructuring plan.
Fairfax Media yesterday morning revealed a deal between Retail Food Group and Alicia Atkinson’s Exit 57 Investments had been exposed to scrutiny after the private company collapsed last month.
Under the deal between Exit 57 and RFG, Exit 57 would temporarily manage stores, including some that had been abandoned by franchisees. The deal was struck in 2014 and was wound up in 2015 and 2016. Mr Alford stepped down as managing director in 2016. He was still a director at the company until July 2017. Ms Atkinson left the company in 2017.
Fairfax Media said RFG’s annual reports for the past five years make no mention of Exit 57. The arrangement is not listed in the company’s related party dealings.
A spokeswoman for RFG told Fairfax: “RFG takes seriously its reporting obligations and believes that our annual reports have, at all times, been in compliance with those obligations.”