Real Good Food to raise £71m in share capital restrucuture

LIVERPOOL-based food manufacturer and supplier Real Good Food is aiming to restructure its share capital to raise £71.3m and cancel its debt.

The move, which must be approved at the company’s annual meeting in London on September 23, will enable the it make dividend payments.

Following the company’s acquisition of Rainbow Dust Colours Ltd in January  and the sale of Napier Brown Sugars in May, it has significantly reduced its net debt and increased its potential to generate profits and cash.

Previous corporate activity had left the RGF with a deficit to distributable reserves but a significant positive balance to share premium account.
 
Until the deficit to the distributable reserves has been eliminated, the company is precluded by law from paying dividends to shareholders.
 
The directors propose to eliminate the deficit by the capital cancellation and  to create distributable reserves.

A company may reduce or cancel its share capital (including its share premium account) and apply the reserve arising on the reduction against an accumulated deficit on its profit and loss account, provided that it obtains the approval of shareholders in a general meeting and the confirmation of the High Court.

A company statement said: “Subject to the approval of shareholders at the general meeting and the confirmation of the High Court, it is intended that the Company cancel the amount standing to the credit of the share premium account, £71.272m, and apply the reserve arising on the cancellation to eliminate the accumulated deficit on the company’s profit and loss account.

“To the extent that the Capital Cancellation exceeds the deficit, it will result in positive distributable reserves.”