Australia’s Retail Food confirms $110m recapitalisation offer from SSG Capital

Photo: Retail Food Group website

Australia’s Retail Food Group (RFG) confirmed it has received an A$160 million ($110.1 million) recapitalisation proposal from Hong Kong-headquartered special situations fund manager SSG Capital Partners.

The development was first reported by the Australian Financial Review.

In a stock filing on Tuesday, RFG said it has received an indicative non-binding proposal from Soliton Capital Partners, an investment fund affiliated with SSG Capital.

It clarified that the indicative proposal remains subject to a number of conditions, including the completion of detailed due diligence, and there is no guarantee that any formal agreement will be reached.

RFG said it has granted Soliton Capital Partners limited exclusivity as discussions continue and further due diligence is carried out.

“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,” it said.

RFG added that it has also been exploring options for potential divestment of non-core assets and discussions for one of these assets are “at an advanced stage”.

Headquartered in Queensland, RFG is Australia’s largest multi-brand retail food franchise owner and a roaster and supplier of coffee products. It operates Brumby’s, Donut King, Crust Gourmet Pizza, Michel’s Patisserie and Gloria Jean’s.

Its retail food business reported a full-year loss in 2018. RFG decided to close 160-200 Australian outlets by the end of financial year 2019 due to high rents and declining shopping centre performance.

Earlier this year, another Hong Kong-based firm PAG was said to be in talks to take over RFG’s pizza chain Crust Gourmet Pizzas via an auction.

RFG was listed on the ASX in 2006, and subsequently built a reputation as a formidable franchise player as it spent more than $500 million in the past decade on acquisitions of food and coffee brands. It has been under pressure since an investigation by Fairfax Media revealed that its franchise business is suffering and many stores have been put up for sale by its franchisees.

Meanwhile, SSG Capital is currently investing out of its fourth flagship fund, SSG Capital Partners IV, and its second private lending fund, SSG Secured Lending Opportunities II, which focuses on credit and special situations investments in the Asia Pacific.

SSG Capital Partners IV and its sidecar vehicle were closed in December 2017 at $1.68 billion. The private lending fund was closed last August at $815 million.

DealStreetAsia had earlier reported that the firm is looking to raise $1.5 billion for its fifth flagship fund, SSG Capital Partners V. The vehicle had received $150 million worth of commitments from Virginia Retirement System.

SSG Capital was founded in 2009 by former Lehman Brothers executives Edwin Wong, Andreas Vourloumis and Shyam Maheshwari.