Retail Food Group shares fell yesterday after the company attempted to defend how it disclosed a $160 million recapitalisation proposal from a Hong Kong backed investment group.
In a statement to the ASX yesterday the company said it didn’t consider the non-binding proposal to be price-sensitive.
The shares closed down nearly 7% at 20.5 cents, lower than on Tuesday. That was the day after it responded to a price query from the ASX by saying it didn’t know of any undisclosed information that could explain the 57% surge in its share price since Friday.
After trading closed on Tuesday, RFG confirmed a report in the Fairfax Media newspapers that it was in “advanced” discussions with Soliton Capital Partners to refinance the company and pay down its $260 million debt.
The indicative offer from Soliton (backed by Hong Kong interests) was valued at $160 million.
RFG also said it was in advanced discussions related to the sale of one of its non-core assets, but there was no guarantee that agreement could be reached.
ASIC said on Wednesday it would review whether RFG breached ASX’s continuous disclosure policies, which requires listed companies to immediately announce any information that might materially affect their share price, and the ASX also sent RFG another “please explain” email.
In responding to the ASX on Thursday, RFG said it didn’t think Soliton’s non-binding proposal “to be information that a reasonable person would expect to have a material effect on the price or value of its securities”.
RFG noted it had previously announced to the market it was exploring a range of options to reduce debt, including asset sales and equity funding methods.
“Given the indicative and non-binding nature of the proposal received from Soliton Capital Partners, in RFG’s view, there is no new material information contained in the information,” RFG said in yesterday’s reply to the ASX query.
“Rather the Information provides colour on the progress of discussions on debt reduction options being explored by RFG.”
RFG claimed that its share price didn’t really move following its disclosure of the Soliton proposal, which is still subject to detailed due diligence from the investment fund.
That claim ignores the 57% jump in the share price last Friday and Monday which was the point of Monday’s price movement query from the ASX.