Troubled firm sells subsidiary for £1.8m
Liverpool based Real Good Food has announced the sale of a subsidiary business for £1.8 million.
The firm, which recently secured a £4m loan and issued a profits warning at the start of the year, has sold Garrett Ingredients to Kent Foods.
The £1.8m is payable in cash, on a debt free/cash free basis, some £1m of which relates to goodwill, with the remainder adjusting principally to reflect the agreed stock valuation.
The funds raised will be used to reduce the group’s debts and the sale is expected to complete this week.
Garretts, which sources dairy, sugar and other specialist food ingredients and sells them to large, medium and small food manufacturers across the UK, has been part of Real Good Food since 2005.
Real Good Food believes that the business has more in common with Kent which is better suited to managing its contracts.
In the group’s financial year results it was announced Garretts contributed £21.3m of revenues and had an operating loss of £900,000.
It has net assets of £1.9m Real Good Food expects to report a modest loss on the disposal.
Hugh Cawley, Chief Executive, said: “We are pleased to have agreed the sale of this small, non-core business as part of our plan to improve the group’s performance.”
When Real Good Food issued its results in December the firm announced that “further substantial additional funding” would be needed for working capital and investment purposes.
The company, which owns the brands Renshaw and Haydens, announced that its three major shareholders – Napier Brown Ingredients, Omnicane International Investors and Downing, had supplied a draw-down loan facility.
In October the company issued a profit warning and announced it was moving its head office from London to Liverpool to cut costs.
Real Good Food serves a number of market sectors including retail, manufacturing, wholesale, foodservice and export.
The firm focuses on three main markets: cake decoration (Renshaw, Rainbow Dust Colours), food ingredients (Brighter Foods, Garrett Ingredients and R&W Scott) and premium bakery (Haydens and Chantilly Patisserie).
