Retail Food Group has asked its shares be suspended from trading ahead of a planned capital raising and changed the terms of its purchase of the Crust Gourmet Pizza Bars franchise system.

In a statement to the Australian Securities Exchange today, RFG, the company behind brands such as Brumby's Bakeries, Donut King, and Michel's, requested it shares be suspended as it undertook a capital raising involving institutional and sophisticated investors.

No timeframe was given for when the stock would resume trading, with RFG asking for the suspension to stay in place "until release to the market of an announcement concerning the outcome of the capital raising''.

Changing Hands: Crust Gourmet Pizza Bar is being sold to Retail Food Group, owners of Brumby's and other food retailers.

 

Meanwhile, RFG said following due diligence and discussions with the Crust vendors it had agreed to pay a fixed $41 million for Crust in the form of cash and RFG shares.

There was also the a potential additional payment of up to $4 million 24 months after the purchase should Crust meet certain targets.

Previously, the deal was for $24 million to be paid in cash and RFG shares immediately, with an additional payment a year later based on seven times Crust's adjusted earnings before interest and tax less $24 million.

"The company's due diligence enquiries have not only provided further comfort regarding future Crust contribution to RFG earnings, they have validated our initial interest and motivation for the transaction itself,'' RFG chief executive Tony Alford said in the statement.

Also, RFG said it had entered into an asset purchase agreement for four pizza and pasta outlets in the ACT, which would be converted to Pizza Capers stores.

RFG shares last traded at $3.00.

 

Source: AAP, 4 October 2012