Regulators are looking into stockmarket deals in the shares of broken fast food franchisor, Retail Food Group (RFG) after a day of almost high farce yesterday.
RFG shares soared 60% last Friday and Monday before easing back to close down by just over 2% at 21.5 cents.
The company had told the ASX it knew of no reason for the extraordinary surge in its price. That was in reply to a query from the ASX on Monday.
Media reports last night and this morning say the huge rise in the RFG share price and associated dealing in the shares is being examined by the ASX and key regulator, ASIC.
Rumours circulated yesterday that the stricken company could be about to receive a bailout proposal from a private equity group with a Hong Kong backed group named in some stories.
Late yesterday RFG – which owns the struggling chains, Gloria Jeans, Michel’s Patisserie, Brumby’s and Donut King confirmed it had received a $160 million refinancing proposal from Sydney fund Soliton Capital, backed by Hong Kong’s SSG Capital.
RFG said the proposal is non-binding and indicative – which is the usual guff for an exploratory approach.
“(T)he indicative proposal remains subject to a number of conditions precedent, including the completion of detailed due diligence, and there is no guarantee that any formal agreement will be reached, the company said in its statement.
“RFG has granted Soliton Capital Partners limited exclusivity while discussions continue and further due diligence is being undertaken.
“Any formal recapitalisation proposal which might be concluded is expected to include debt and equity/equity-linked components and may be dilutive to existing shareholders.
“As indicated in its 1H19 Results, RFG has also been exploring options for potential divestment of its non- core assets. Discussions in relation to the sale of one of those non-core assets are at an advanced stage, but there is no guarantee that any formal agreement will be reached,” RFG.
This is not the first time RFG shares have run up quickly on rumours. In March the shares jumped around 50% on news it had renegotiated its debt with its banks.