Retail Food Group has defended the way it revealed a potential partnership with Sydney-based Soliton Capital Partners, which saw the company’s shares spike last week from 13 cents a share on July 1 to 21 cents a share on July 9.

The franchisor announced on July 10 that it was in talks with Soliton Capital Partners, which could see $160 million injected into the business, and close to selling one of its businesses, raising questions about whether this had caused the previous days’ jump.

In response to questions from the ASX, RFG said it wasn’t aware of any reasons for the increase.

However, in response to further probing from the ASX, the company revealed it entered into the non-binding agreement with Soliton on July 1, the same day its stock started to rise.

“Given the indicative and non-binding nature of the proposal received from Soliton Capital Partners, and in light of RFG’s previous announcements to the market, RFG does not consider that the entry into a term sheet in connection with such indicative, non-binding proposal required disclosure to the market,” the business said in a statement to the ASX. 

The franchisor said it has previously stated it was exploring several ways to reduce its $258.9 million debt, including the sale of assets and alternative funding avenues, and therefore did not mark the Soliton announcement as price sensitive.

RFG operates the Gloria Jean’s Coffees, Brumby’s Bakeries, Donut King, Michel’s Patisserie, Di Bella Coffee, The Coffee Guy, Café2U, Pizza Capers and Crust Pizza.

According to the ASX’s definition of ‘aware’, a business must declare such information as soon as a representative has “come into possession of the information in the course of the performance of their duties as an officer.”

The fact that it took RFG over a week to disclose the information is likely to come under review by the stock exchange.