Shares in Freedom Foods Group resumed trading this week after a nine-month hiatus, as the troubled company aims to raise $265m in fresh capital to stabilise the group. Freedom shares last traded at $3.01 on the ASX before the suspension on 24 June 2020 as a massive earnings overstatement and plans for recapitalisation were announced. As expected, the share price crashed to just 28c on opening but quickly recovered with some large opportunistic buying to crest at 77c before easing (with fast returns for some buyers) to 58c at yesterday’s close.
The Perich family – through Arrovest which owns 52.5% of the company – is proposing to inject up to $200m through a subordinated secured convertible note issue. Arrovest wants the ability to scale back investment to a minimum of $135m, depending on the level of participation under the $130m wholesale investor offer priced at $1 per share. The company will use the proceeds to repay between $183m and $233m of debt.
Freedom shares have a net tangible asset backing of less than 1c per share, and the company remained unprofitable in the first half of the current financial year and does not offer a full financial year forecast. The dairy and nutritionals unit reported an adjusted EBITDA of just $8.5m (a 4% margin on sales) in the first half of FY2021, alongside the plant-based beverages unit which booked $15m at a margin of 20%.