Australia-based Freedom Foods Group has announced a recapitalisation of up to AUD265m (US$203.3m) as part of its turnaround strategy.
It has also announced Michael Perich, who has been interim CEO at the company since August, has been given the job on a permanent basis, effective immediately.
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By GlobalDataFreedom Foods, which has had a troubled 18 months amid scrutiny over its accounting, executive departures and asset disposals, said the recapitalisation will allow it to “substantially repay its bank debt, providing a flexible capital structure that better facilitates the continued financial and operational turnaround of the company”.
The capital-raising comprises an offer of unlisted, subordinated secured convertible notes to eligible wholesale investors of up to AUD130m and an AUD200m commitment to subscribe for notes secured from its majority shareholder, Arrovest, the investment vehicle of the Perich family – a cash injection agreed in principle back in January.
Banks NAB and HSBC will provide a new two-year, AUD36m facility to the company, along with a two-year term debt facility for up to AUD50m, depending on the total note proceeds raised.
The completion of the recapitalisation is targeted for May,
Freedom Foods chair Genevieve Gregor said “This recapitalisation is an important step in the operational and financial turnaround of Freedom Foods Group.”
She added: “Operationally, we have announced the sale of certain non-core assets and adopted a simplified business strategy to ensure we are focused on the brands and products with the greatest potential in our dairy and nutritionals and plant-based beverages businesses.
“Our first-half financial results, released last month, demonstrate that we are making good early progress on the turnaround.”
On the appointment of new permanent CEO Perich, Gregor said: “Since taking on the role of interim CEO at a challenging time, Michael has provided much-needed stability and leadership to the company and its people. He has been at the forefront of the operational and financial improvements across the business and the board is delighted he will take on the role on a permanent basis to continue to drive the turnaround now well underway.”
Earlier this month, Freedom Foods said its turnaround plan is “beginning to gain traction” after seeing sales rise and losses decline in the first half of its financial year.
The company behind Australia’s Own milk and Vital Strength protein powders booked a 10% increase in revenue to AUD317.3m for the six months to the end of December.
In December, Freedom Foods agreed to sell its cereal and snacks business to Australian snacks maker The Arnott’s Group.
The results from Freedom Foods’ prior fiscal year have been restated after a Deloitte investigation into accounting at the company. The review, which also led to Freedom Foods’ 2018 and 2019 financial accounts being restated, followed news last June the company was probing the possibility of fraudulent activity in the wake of write-downs, charges which followed the departure of senior executives.
Trading in the listed company’s shares has been on hold since last June but resumed trading on the Australian Securities Exchange (ASX) on Monday (22 March), In early trade, the diversified food company’s shares were down 94% to AUD0.18 but they had recovered by the end of Tuesday to AUD0.58.
