Australia’s Freedom Foods Group has reached an “in-principle agreement” with its majority shareholder Arrovest for a cash injection under a recapitalisation project.
Arrovest, a New South Wales investor owned by the Perich family, has agreed to inject AUD200m (US$153.7m) into Freedom Foods through the issuance of secured convertible notes, capital the business will use to “enable it to continue its financial and operational turnaround”, as well as to pay down debt and for working capital.
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Freedom Foods, which produces consumer-dairy products, dairy ingredients and plant-based beverages, launched a review of its accounts back in August after previously announcing potential fraudulent activity, an episode that resulted in the resignation of CEO Rory Macleod and CFO Campbell Nicholas last summer. Company secretary Trevor Allen soon followed.
Michael Perich, who is currently serving as interim CEO, said: “Despite the challenges of the past ten months, there remains a fundamentally strong business at the heart of Freedom Foods. With the ongoing support of Arrovest, our banks and other shareholders, we have the opportunity to rebuild the business and enable it to meet its full potential.”
In November, a local media reported suggested Freedom Foods had engaged Oaktree Capital Management, Anchorage Capital Group and Sixth Street Partners to back the company under the recapitalisation proposals.
However, Freedom Foods said in a statement today (29 January) that it had been “progressing a proposed recapitalisation plan with a potential new investor” since December, but the company and its creditors “were not able to agree acceptable terms”.
The company added it “continues to explore options to provide investors who are not eligible to participate, an opportunity to participate in the recapitalisation”.
Still, Arrovest’s participation is the recapitalisation remains subject to wider shareholder approvals but Freedom Foods expects the process to be completed by April. For now, Freedom Foods’ shares remain suspended on the Australian Securities Exchange.
Last month, Freedom Foods sold its cereal and snacks division to local peer The Arnott’s Group, which is owned by US private-equity firm KKR, for AUD20m (then US$15.2m).
