As the markets closed on Friday afternoon, Freedom Foods Group lodged its recapitalisation plans, including a 270-page prospectus. New chair Genevieve Gregor said the ASX had denied the company’s request for 48 hours before trading recommenced, so the late release was its only option.
As it was, there was a rush to the exit when the group returned to trading on Monday, with shares falling more than 82 per cent to just 53 cents. Shares are currently at 59 cents with a market capitalisation of $162.1 million. That is in comparison to its final day of trade on 24 June 2020, when it was valued at $3.01 per share with a market cap of $834 million.
On Monday, after 218 million shares exchanged hands, the majority shareholder Arrovest, the investment vehicle of the Perich family, had the value of its stake fall from $428 million to $75 million.
In the prospectus, the company aims to raise $265 million in fresh capital by issuance of unlisted, subordinated secured convertible notes and a restructure its existing debts with HSBC and NAB.
Freedom Foods said the proceeds will repay between $183-$233 million of the company’s existing debt and provide a more flexible capital structure for the financial and operational turnaround of the company. It would include two years of financial covenant-free senior debt and six years of financial covenant-fere notes.
The raise will give existing shareholders preference in an offer of up to $130 million notes in a wholesale investor offer, with a coupon rate of seven per cent for the first 30 months.
Arrovest has already given its binding agreement for $200 million notes, but with an option to scale back to a minimum of $135 million depending on the take-up of the wholesale offer.
Feedom Foods is also seeking to raise a further $65 million from new and existing shareholders, but that is a value-add on the recapitalisation plan.
The wholesale investor offer is priced at $1 a share. Subject to shareholder approval, 40.8 million listed options will be issued pro-rata to all shareholders excluding Arrovest to raise a maximum of $40 million, which is roughly 1 option for every 3.2 shares held.
The offer will open on 29 March 2021.
In other news, Stuart Muir is joining as chief operating officer in April and Stuart Black joined the board as an independent non-executive director this week.