Allied Brands Ltd (ABQ) has made what they claim is a huge announcement about Venture Capital investment into ABQ. Details of the cash injection continue to reveal what share brokers have already been advising clients about ABQ - to run far away.Venture Capital money is last resort, high priced money that ABQ has tapped when banks and other normal sources of operating capital have rejected more money for a company. DETAILS HERE of the Springtree investment show ABQ paying huge upfront fees of over $160,000, high interest on cash drawdowns, and perhaps other details not revealed by the company in their market statement. This isn't acquisition money - its operating funds!
Is Springtree going to install their own director on the board to watch where their money is going? How can $100k/month in cash be anything but more money to squander? Why is Allied Brands biggest competitor, Retail Food Group (RFG) comfortably making acquisitions with the huge cash flow normally generated by franchise service companies?
ABQ continues to show that they are clever at keeping outside cash flowing in, while franchisees continue to see profits decline and shops continue to close. Clearly the ASX market isn't fooled by all this trickery - as ABQ shares continue to decline. ABQ has seen over 50% share dilution in the last year, with profit forecasts continually missed by massive amounts, and squandered opportunities continue all while cash injections have been spent on management share loans and other insider perks.
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