Retail Food Group is pitching a $160 million-plus equity raising to fund managers.

It is understood Retail Food Group has been meeting institutional investors in recent days, testing their appetite for what would be a big recapitalisation of the company.

Stockbrokers Shaw and Partners and Petra Capital are involved as lead managers, sources said.

It is understood RFG wants to raise at least $160 million to repay debt and provide funds for management's plans to refocus the business on its core retail food franchise and coffee operations.

The mooted raising is about five-times Retail Food Group's market capitalisation.

The company had net debt worth $259.7 million as at June 30, which was worth more than five-times underlying EBITDA recorded in the 2019 financial year.

Fund managers are trying to work out whether Retail Food Group management are able to cut the company free from recent issues, both operational and financial, or whether it has become too toxic to ply fresh funds into.

The company has made changes to its executive team and board, including the appointment of ex-PMP Ltd managing director Peter George as executive chairman.

The mooted raising comes after Retail Food Group had been in talks with special situations firm Soliton Capital Capital, which put its own$165 million recapitalisation proposal to the company a few months ago.

RFG, which is listed on the ASX and franchises brands including Michel's Patisserie and Donut King, has been in talks to sell a number of assets or refinance its debt in recent months. 333 Capital is advising RFG.

Article source: AFR, 25 September 2019