Shares in Freedom Foods Group Ltd (ASX: FNP) are in a trading halt as the company prepares to announce news of its capital raise. The battered Freedom Foods share price is paused at 43 cents, which is 2.38% higher than yesterday's close.
Today's pause in trading comes months after news from Freedom Foods that is undergoing what it hopes will be a $265 million recapitalisation to pay off its debts.
The capital raise will consist of subordinated secured convertible notes priced at $1 apiece.
The company hopes the capital raise will include a $200 million leg up from the Perich family, the company's largest shareholder.
To make it up to $265 million, the company will also offer up to $130 million worth of notes to wholesale investors. Priority will be given to the company's existing shareholders.
Let's take a closer look at what the food distributer has been up to lately.
Fresh capital
The question on many investors' lips today is likely to be whether the Perich family will make the offered $200 million investment.
According to the Australian Financial Review, today's trading halt will be followed by news of whether the family's investment vehicle, Arrovest, will fork out the entire sum.
By purchasing $200 million worth of notes, Arrovest could hold an 80% stake in the company by 2024. That's a significant increase from its current 51.5% stake.
Freedom Foods is planning to use between $183 million and $233 million of the raised capital to pay off its debts. The rest will go towards corporate costs and fees from the capital raise.
Freedom Foods returned to trading on the ASX after a 9-month suspension due to significant accounting issues in March 2021.
On their return, Freedom Foods shares fell a whopping 84% to 53 cents each. On the day of its suspension, the Freedom Foods share price was trading at $3.01.
While its share price was in suspension, Freedom Foods faced a number of class actions, which are still ongoing. It also entered into a dispute with one of its suppliers.
Furthermore, the company offloaded its cereal and snacks business to The Arnott's Group for $20 million.
Freedom Foods share price snapshot
Since the Freedom Foods share price resumed trading on the ASX in March, it has plummeted a further 18.87%. It's also down 89.76% over the last 12 months – 9 months of which, it was in suspension.
The company has a market capitalisation of around $116 million, with approximately 277 million shares outstanding.
