Running out of options

News that Allied Brands has finally lost the Australian master franchise rights to the Baskin Robbins chain appears to leave the company with very few options – in a few short months, the business has been reduced to almost nothing.

In June, Allied Brands consisted of the Baskin Robbins chain, the Cookie Man chain, Awesome Water, Awesome Entertainment, the Villa & Hut chain and the Kenny’s Cardology chain.

Now, it’s almost all gone or on the way out. The Baskin Robbins franchise rights have been terminated, Cookie Man is in liquidation, Awesome Entertainment has been shut, and Villa & Hut and Awesome Water are up for sale.

All that is really left is Kenny Cardology – a business CEO Sean Corbin admitted earlier this year he would be glad to be rid of.

Quite how Corbin can rescue Allied Brands from here is simply not clear.

While plenty of people have various theories there are also a number of theories on why Allied had crashed so low – including the idea it tried to jam a number of very different businesses under one umbrella – there is likely to be one group who will demand to know exactly what went wrong, and who is to blame.

And that is Allied’s beleaguered shareholders.

Over the last three years, Allied Brands has conducted at least two capital raisings and a share purchase plan to bring more capital into the company to fund expansion.

In 2007, there was a $10 million capital raising. In May 2009, there was a $2 million raising for so-called sophisticated investors (those with more than $500,000 to invest).

There was also a $4.9 million finance facility obtained from a US investor, although exactly how much of this has been used isn’t clear.

It’s also worth noting that as late as September 14, the company was considering another capital raising.

Every one of these investors will be asking where their cash has gone. And it won’t shock anyone if some start considering ways to recover it.