RFG retail food group limited

5.88%

$1.08

Out at $1.20, page-14

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Yoda2503

631 Posts.

82

09/03/18

13:49

Post #: 31647305
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Originally posted by Jimmy_C ↑

Well done on changing tack based on new information - it's never an easy thing to do as an investor.

I generally agree with your comments, but where i disagree is your assumption that raising $100m @ $1.80 could have easily been accomplished a few months back. They would have had to get someone to underwrite the equity raise to make it worthwhile, and that discussion would have gone something like this:

RFG: "Hi, we're over leveraged and would like to raise $100m to pay down debt".

Banker/underwriter: "Sure, we can help. What are your earnings and cash flows likely to be over the next 12-18 months? Investors need this information so we can fairly price the offering and we can assess underwriting risk."

RFG: "Absolutely no idea whatsoever - our business model is completely broken, earnings are in free fall, and we have no reasonable basis to provide any earnings forecasts, sorry."

Banker/underwriter: "OK, sorry to hear that. Well, come back to us once you've got an idea what your sustainable earnings are, and we'll do the equity raise for you."

Unfortunately, raising equity isn't just a case of passing the hat around and magically gathering money. It has a cost, a process needs to be followed, and investors generally like to understand what they're buying when you're asking them for money. As things stand presently with RFG, investors have absolutely no idea what the sustainable earnings for this business are, so it's very difficult to raise equity.

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If the lead underwriters were so sofisticated how did gsw raise like 100m at 4 bucks

Bottom line is if the fees are high enough a capital raising will be filled

It does look likely that a capital raising will occur within the next 6 months though as bankers and company directors get nervous when debt exceeds market cap

RFG Price at posting: $1.19 Sentiment: None Disclosure: Not Held
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Last $1.08		Change 0.060(5.88%)		Mkt cap ! $64.47M

Open	High	Low	Volume
$1.04	$1.09	$1.04	81.04K

Buyers (Bids)

Vol.	Price($)
3000	$1.05

Sellers (Offers)

Price($)	Vol.
$1.10	14566

Last trade - 16.17pm 14/08/2026 (20 minute delay)

RFG (ASX) Chart

Out at $1.20, page-14

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