RFG offloads key food business
THE changes keep coming for embattled Gold Coast food franchisor Retail Food Group.
This week the Donut King owner, which holds its AGM today at the RACV Royal Pines Resort in Benowa, revealed it had vacated its main office premises at Olympic Court in Southport with plans to move to the Foxtel tower in Robina.
Yesterday it also said it had signed an agreement to sell food business Hudson Pacific back to its original owners Frank Karkalas and Ken Skoullos.
Mr Skoullos founded Hudson Pacific in 1985 and grew it to become a major procurement, warehousing, manufacturing and distribution business offering more than 4000 products.
In 2016 RFG paid $88 million for the business, $55 million in cash and $33 million in RFG shares, with both Mr Skoullos and Mr Karkalas, who was then CEO, agreeing to join the ranks of RFG.
A spokeswoman for RFG declined to name the sale price for HPC.
Settlement is due to occur in January next year.
The company first announced in October it was looking to offload the loss-making Hudson Pacific business.
Executive chairman Peter George said the sale would provide staff and customers with certainty under a new owner "familiar with the business".
RFG is a vastly different beast from the one that bought Hudson Pacific in 2016.
Then the company was coming off a record profit of $61.3 million, 79.1 per cent higher than the previous year.
HPC had acted as a distribution partner of RFG prior to the acquisition.
Former managing director Andre Nell was quoted in the Bulletin stating it planned to take the business global, particularly to China to take advantage of Australia's growing food reputation in Asia.
In August this year the company reported a staggering $149 million net loss in the wake of reports of systematic exploitation of franchisees.
Revenue had fallen 6.5 per cent to $349.77 million and underlying earnings 28.9 per cent to $50.73 million.
Mr George was appointed to the role of executive chairman in November last year as a "turnaround expert".
He has presided over a slimming down of the RFG operation as well as a major restructuring of its finances including raising $190 million from investors to pay back debt.
A deal was also agreed with financiers to pay back $118.5 million, wipe off $71.8 million worth of debt and provide a new $75.5 million facility through to November, 2022 to refinance the remaining debt.
The company's footprint did not escape Mr George's attention either.
The company earlier this week vacated 1-3 Olympic Circuit in Southport and is in the process of fitting out new premises at 35 Robina Town Centre Dve, the home of Foxtel. RFG will lease the whole of level four, which spans 1700sq m. It is understood to be on a five-year lease term paying between $400-$450 a square metre.
CBRE's Nick Selbie, who introduced RFG to the leasor, and Colliers' Bed Blatchford, who markets the property, both declined to comment on the deal.
RFG said it expected the fit-out at Foxtel to take about two weeks. While waiting for the fit-out to be completed, RFG staff will work from level nine of the Corporate Centre in Bundall.
Its administrative office will be temporarily relocated to premises in Tullamarine, Melbourne while the fit-out is completed. RFG said there would be no change to its offices in Brisbane, Sydney, Auckland and Los Angeles.
The company announced in May it was looking for new offices on the Gold Coast, a third smaller than its then footprint.
The RFG brief was for 2500sq m on a long-term lease with a minimum of five years.
The Foxtel lease is 32 per cent lease space than RFG previously said it was looking for and follows a significant restructuring within the organisation. The Pizza Capers owner previously had 3485sq m of space spread across Olympic Drive and 18 Commercial Drive in Ashmore.
It is understood the 1-3 Olympic Drive premises will be knocked down to make way for a self storage facility run by Kennards Self Storage.
The owner of the property is a subsidiary of Baudinet Group Pty Ltd, a Sydney-based company that has undertaken developments with Kennards.