Real Good Food to invest £7m in Liverpool site
Baking ingredients business Real Good Food has raised £15.5m of expansion capital – half of which will be invested in it’s Renshaws manufacturing plant in Liverpool.
The cash has come from a new investor and two existing shareholders, through both debt finance and new equity.
It will be raised through the issue of a secured loan note, redeemable after three years, of up to £8.75m from funds managed and controlled by Downing LLP. Downing funds will also buy 10% of the shares in Real Good Food at 35p a share, raising a further £2.75m.
The AIM-listed company, which is headquartered in London, has also put in place two further £2m secured one year term loan facilities from existing shareholders Napier Brown Holdings and Omnicane.
It will use the cash to expand two of its subsidiary companies, Renshaw and Haydens .
Renshaw’s Crown Street site in Liverpool will see £7m invested in expanding capacity by over 50% as well as the installation of new soft icings and discs production lines.
The company said the investment will support Renshaw’s strategy to broaden the offering to mainstream users and will help to meet forward demand, driven by international expansion and the launch of a mainstream retail brand at Renshaw.
At Haydens in Wiltshire, the company will invest £8m to reconfigure site operations, including blast freezing capability and the installation of a new, automated Yum Yum line.
The acquisition of two new major customers has put short term pressure on operational capacity at Haydens and the investment will take site capacity from £30m revenues to over £50m.
At both sites the investment will bring benefits in efficiency, upskilling the workforce and mitigating the impact of the forthcoming Living Wage increases, it said.
Pieter Totté, executive chairman of Real Good Food, said: “As we have already advised shareholders, we believe that there is a significant opportunity to invest in our operating subsidiaries to drive more efficiencies, customer growth and improve operating margins, which ultimately will accelerate the company’s organic growth.
“We have already embarked upon this within our Cake Decorating division and are seeing positive results in order intake at Renshaw and Rainbow Dust. The board has taken the decision to raise the expansion capital in order to enable us to accelerate our investment programme into other divisions, including a major increase in capacity at our Haydens site within the Premium Bakery.
“We believe this is the first significant step in funding a major medium term investment programme which will secure our competitive position for the longer term and ultimately will drive future returns for shareholders.”
The majority of the expansion plan is expected to be completed by the end of September 2017.
