"Oliver's Real Foods does have a future once lockdowns are over, but the present trading situation is a major setback, and all shareholders and other key stakeholders need to understand that it will take time to recover from this," says Mike Greg, a leading shareholder in the group.
The two largest shareholders in Oliver's Real Food (ASX: OLI), who overthrew the founding leadership in March to implement a new turnaround plan, have once again opened their own wallets to keep the healthy food retailer and purveyor afloat.
OLI shares have been in a trading suspension for more than 24 weeks now, while lockdowns and border restrictions have taken their toll on the group whose sales are closely tied to road travel.
After the company recorded a net cash outflow from operations of $487,000 in June with just over $1.57 million in cash left at the end of that month, the situation got worse in July with company-owned store sales down 74 per cent on 2019 levels.
In contrast, June sales had only been around 22 per cent lower than the pre-COVID benchmark, and were even up slightly in Queensland.
But the lockdowns last month led to an 88 per cent drop in NSW versus July 2019, a 55 per cent decline in VIC, and a 9.98 per cent fall in QLD.
The implications are not promising for the cash reserves of a company that was already burning through the proceeds of a $3.3 million placement earlier this year, which involved the participation of major shareholders Suzanne and Mike Gregg, and Gelba Ltd, each holding 17.16 per cent and 10.38 per cent respectively.
As a lifeline, the company today announced that after discussions with primary lender PURE Asset Management, an agreement was reached for OLI to establish a $500,000 unsecured overdraft facility with these two largest shareholding entities, which is temporary and will be available up to 30 September this year.
Oliver's explained the facility would enable the company to manage cashflow during these difficult trading conditions, and welcomed support from significant shareholders, giving the company time to fully consider future funding requirements if current lockdowns persist past mid-September.
"As the largest shareholder, I'm happy to contribute to this temporary overdraft facility. COVID-19 lockdowns are impacting Oliver's business significantly, and I recognise this and support the board, management, and all Oliver's team members as they navigate the company through this challenging period," Mike Gregg says.
"Oliver's Real Foods does have a future once lockdowns are over, but the present trading situation is a major setback, and all shareholders and other key stakeholders need to understand that it will take time to recover from this.
"I supported the company whilst it restructured its operating model in recent months, and our family, along with Gelba Pty. Limited and other significant shareholders will continue to work with the company now and in the weeks ahead."
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