Reports in Australia suggest Freedom Foods Group is close to disposing of its cereal and snacks division.

The Australian Financial Review reported the publicly-listed company is “close to hiving off” this business for around AUD30m (US$22.7m) to New York-based private-equity firm KKR.

In a filing today (16 December) with the Australian Securities Exchange (ASX), Freedom Foods said it had made “progress” in its recapitalisation plan by “assessing options” for its cereal and snacks division, which makes the Messy Monkeys and Arnold’s Farm brands.

The company, which also produces fresh milk, milk drinks and plant-based beverages, has had a difficult six months.

It has been undertaking a review of its accounts since August. In a call with analysts on 25 June it said it was probing the possibility of fraudulent activity after booking write-downs following the departure of senior executives.

The company has been in talks with funders as part of its efforts to recapitalise the business with a cash injection of at least AUD200m.

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By GlobalData

An update on the progress of those talks was due this month but, in its statement to the ASX today, Freedom Foods said that has been pushed back.

“The company has made good progress in this regard and remains in advanced discussions with a new investor to support the capital and operational turnaround of the business. It is likely that an update on the capital raising will occur in January 2021,” it said.

A halt in trading of the company’s shares has also been extended.

They “will remain in voluntary suspension until after it has announced its proposed recapitalisation,” Freedom Foods said.

Last month, it was reported that the company had engaged with a number of funders in regard to its recapitalisation proposals.

Australian media outlets said they understood the funders would offer the group cash in return for an interest-bearing loan and, potentially, an equity stake in the future.

The company said in June it had engaged professional firms Ashurst and PwC to assist with its internal investigation into possible fraudulent activity.

just-food contacted KKR seeking confirmation of the Australian media reports. A spokesperson said: “We’re not able to comment on market speculation.” 

The private-equity firm already owns Australia-based food assets. Last year, it bought the food group Arnott’s from US major Campbell Soup Co.