breach of the debt covenant by Competitive Foods, the group behind the Hungry Jacks brand, came as its profit plummeted 68 per cent last financial year.Competitive Foods, one of the largest operators of fast food outlets in Australia, also failed to sell its KFC business within the time frame it expected. The details are revealed in company filings with the corporate regulator.
Competitive Foods owns and franchises out Hungry Jacks and KFC outlets across Australia.
It had expected to wrap up a sale of its KFC division by the start of March but is yet to complete a deal.
One of Australia's largest privately owned companies, the group was forced to negotiate with its lenders after $100 million in borrowings was reclassified from a non-current to current liability in its accounts last year.
The move caused the company to breach its interest cover ratio - a measure banks use to calculate if borrowers can pay the interest on their outstanding debt.
Lenders to Competitive Foods agreed to waive the condition and the report notes the company is confident of complying with all covenants in future.
Debt covenants are effectively trigger points in loans. When borrowers breach the covenants, their lenders can demand immediate repayment.
Competitive Foods general manager Ian Parker yesterday said the company was working to conclude a sale of its KFC division in the near future.
Mr Cowin was in transit overseas yesterday and was unavailable for comment.
The group generated $7.7 million in net profit in the year to last July 2, down from $24.1 million the previous year. Its profit has plummeted 76 per cent over the past two financial years.
Revenue was marginally higher at $935.2 million last year but rises in costs for royalties, utilities, wages and rent eroded the bottom line.
The Canadian-born Mr Cowin also sits on the Fairfax and Ten Network boards with close friend and Australia's richest person Gina Rinehart. He is a veteran rich-lister, currently ranked 63rd on the BRW list with a personal fortune valued at $610 million.
Competitive Foods is behind more than 300 Hungry Jacks outlets nationally and about 45 KFC outlets in Western Australia and the Northern Territory.
Mr Cowin is also the major shareholder in Domino's Pizza Enterprises, the Australian-listed master franchise licence owner for the pizza brand.
Net profit in Competitive Food's KFC business more than halved last financial year, falling from $6.2 million to $2.9 million.
