Franchisees could put in a bid to buy Refund Home Loans following the company's announcement it will enter voluntary administration.
Refund Home Loans announced to franchisees on Wednesday that it had entered voluntary administration due to $2.5m in debt. The company's communications consultant Peter Sawyer has told Australian BrokerNews that franchisees may launch a bid to buy the business.
"It is feasible," Sawyer said, commenting that Refund founder Wayne Ormond first announced the developments to a group of senior franchisees.
"Their immediate reaction was, 'We must support this, we must maintain business as usual and we must look for like-minded colleagues who want to bid for the business. Wayne and the directors are going to take a bit of a personal battering probably, but the support of the franchisees was really good to hear," he said.
Sawyer said the task of the administrators will be to sell the business, and that there have been a number of interested parties "for whom the franchise network is obviously very attractive". He said some potential buyers will wait for the administration process to play out before launching their own bids. In the meantime, Sawyer commented, franchisees will operate as normal.
"The general agreement is to work to business as usual. There's a degree of - I think reasonable - hope. We're 24 hours in and people have a reasonably positive state of mind. It's an obvious blow. It's a blow to any company and it's a blow to the directors," he said.
Sawyer put the company's problems down to "over exuberant growth" in the years following its founding. He commented that this was exacerbated by banks retreating from financing the company's debt following the Queensland floods.
"The growth was to take advantage of the market at that time. What knocked it around was the reluctance of the banks after the January floods. We're a company that's had valuations of $50m that only have to clear $2.5m. That's ridiculous," he said.
Sawyer added that the administration would not affect Refund Real Estate or Refund Financial Planning.