The Freedom Foods Group Ltd (ASX: FNP) share price has been suspended for over seven months but could soon be returning to the ASX boards.
This morning the embattled food company released an update on its recapitalisation.
What did Freedom Foods announce?
According to the release, Freedom Foods has reached an in-principle agreement with its majority shareholder, Arrovest, for a recapitalisation of the business. This will involve the issue of secured convertible notes.
Arrovest, which is owned by the Perich family, has stepped in after advanced talks between another new investor collapsed.
In addition to this, the company advised that the in-principle agreement with Arrovest has the non-binding indicative, in-principle support of the company's senior lenders, National Australia Bank Ltd (ASX: NAB) and HSBC.
Management notes that the funding from the recapitalisation will enable the company to materially repay its senior term and revolving secured debt. It will also provide Freedom Foods with sufficient working capital and a stable capital structure to enable it to continue its financial and operational turnaround.
Under the terms of the new in-principle agreement, Arrovest has agreed to invest up to $200 million, with the company having the capacity to raise further capital. Though, it will not be a condition for it to do so for the transaction to complete.
Interim Chief Executive Officer Michael Perich said: "Despite the challenges of the past 10 months, there remains a fundamentally strong business at the heart of Freedom Foods – a market-leading dairy and plantbased beverages and nutritionals business. 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."
Tony Perich AM said: "We have been committed supporters of Freedom Foods for 15 years and, despite the difficulties of the past year, we continue to believe in its potential to be one of Australia's great food and beverages companies."
Freedom Foods' shares will remain in voluntary suspension pending further details of the recapitalisation.
