Freedom Foods Group is an Australian company and as the name suggests, they engage in the manufacture and sale of food products. It operates through the following segments: Dairy and Nutritionals; Plant Based Beverages; Cereal and Snacks; and Specialty Seafood. The Dairy and Nutritionals segment consists of dairy milk beverage, nutritional products and performance and adult nutritional powders. The Plant Based Beverages segment comprises liquid stocks, soy, rice, and almond beverages. The Cereal and Snacks segment consists of allergen free, nutritional oat based, low sugar or salt, highly fortified or functional. The Specialty Seafood segment offers canned seafood covering sardines, salmon, and specialty seafood. The Nutritionals segment includes performance and adult nutritional products.
Freedom Foods shares were suspended from trading on the ASX for over 9 months because an audit and investigation by Deloitte and PwC revealed that there were several accounting scandals which ultimately cost the firm $590 million in write-downs. It also resulted in their CEO and CFO resigning.
As the company returned to trading, Freedom Foods share price opened at just 20 cents and then regained some ground, however, ultimately closed at just over 50 cents a share as shares slumped close to 85%. Prior to suspension, Freedom Foods closing price was $3 a share.
Freedom Foods revealed that they are raising convertible notes worth $265 million and restructure its debt facilities with HSBC and NAB. The proceeds from this capital raise will be going towards servicing the existing debt that the company holds and to also fund operations.
With a revamped board and a somewhat changed management team, Freedom Foods is looking to put the scandal behind them and re-list on the ASX, however, we are not as positive about the long-term benefits of investing in Freedom Foods. Their reputation has been taken to the cleaners recently and it’s a long road back up if they are to regain the trust of long-term investors and markets.
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