Steve Baxter, founder of River City Labs.
Steve Baxter, founder of River City Labs.

Vultures circling troubled Retail Food Group

IT sure looks like the vultures are circling embattled Retail Food Group, which operates the likes of Donut King, Brumby's bakeries and Crust Pizza.

City Beat spies report that private equity players down south have been picking apart the Gold Coast-based company's disastrous full-year results ahead of a possible hostile takeover bid.

RFG suffered a $306.7 million net loss, more than three times the amount originally flagged to the market, as it closed 250 stores and the share price tanked.

Worse still, it has warned of possible collapse if it breaches obligations to Westpac and NAB, which are owed $265 million by next October.

EX RFG-MANAGING DIRECTOR'S EYE-WATERING PAYOUT

RFG has closed 200 stores.
RFG has closed 200 stores.

One retail industry veteran who has closely studied the results told us the board "have no solutions to the problems''.

"In fact, if anything, their 'solutions' are contradictory to the ability for the company to recover in any way,'' he said.

"They talk about 'optimising profit' for franchisees but don't explain how and say they will open new stores after announcing another 200 will close this coming year.

"They talk about 'selling some brands' to retire debt but selling Donut King and Crust will only further deplete cash flow and profits.''

In the absence of a takeover battle, he predicted that the market would look for RFG to raise up to $100 million in new equity to restore the balance sheet.

NEW STARTUP INVESTMENT

THE new owners of Steve Baxter's startup incubator hub in Brisbane plan to invest $7.5 million over the next three years to back tech entrepreneurs.

It emerged yesterday that a Sydney-based mob, the Australian Computer Society, had acquired River City Labs for an undisclosed sum.

With more than 42,000 members, ACS is the professional association for the nation's information and communication technology sector.

Baxter a millionaire investor and Shark Tank star, plans to remain in an advisory role for at least six months and all staff have been invited to stay in their current role.

He launched RCL as a non-profit in 2012 and it proved to be highly successful, with more than 700 startup founders using co-working space at the group's Fortitude Valley HQ.

Corporates, including Bank of Queensland, CUA, Suncorp and Telstra, also surfed in on the action.

After launching an expressions of interest campaign in May, Baxter received more than 20 submissions, with the list of suitors eventually whittled down to just four parties.

Talks with ACS kicked off in late June and the final bits of the contract were finally nailed down this week.

Meanwhile, Baxter's year-long tenure as Queensland's Chief Entrepreneur ends in the middle of next month. No successor has yet been named.

QUIET PM MEET

HIGH-flying Brisbane restaurateur John Kilroy hosted a very hush-hush meeting out of the limelight this week for a bunch of bizoids keen to get a bit of facetime with our new PM.

At the request of one of his customers, he invited ScoMo and friends to gather on Tuesday night at his $4 million pad in New Farm, complete with stunning views of the Story Bridge.

No prizes for guessing Kilroy provided the food and drink, seeing as he runs riverfront venues Jellyfish, Il Centro and Cha Cha Char.

Kilroy was less than keen to talk about the event when City Beat rang for a chat yesterday and insisted that it was not a fundraiser.