Bakery ingredients firm aims to rise again after agreeing financing package
Troubled baking ingredients business Real Good Food announced this afternoon, May 4, that it had agreed terms for at least £8.2m in new financing arrangements, which directors said have more than likely saved it from collapse.
The Liverpool-based firm said funding has come from its three major shareholders – Napier Brown Ingredients, Omnicane International Investors, and certain funds managed by Downing LLP, subject to finanisation of standard documentation.
This follows previous statements, most recently in an announcement on March 27, that the board had identified the need for further substantial additional funding for working capital and investment purposes to implement the company’s business plan.
The company is due to pay the final tranche due to the vendors of Brighter Foods, approximately £4.5m, later this month, following the acquisition of the company in April last year.
Real Good Food said the financing arrangements will not only fund this £4.5m deferred consideration, but also provide a maximum of £4.2m to fund the company’s foreseeable working capital needs, including for the build-up of supplies in advance of the group’s third quarter in October to December, which is typically its busiest.
The funding is to be provided by means of secured loan notes.
Real Good Food’s announcement said: “In the current board’s view, historically poor controls and governance have contributed to poor performance in all divisions, and the issues have been exacerbated by disruption caused by the delays in implementation of complex investment programs.”
It states: “Without this funding the directors believe that there is a significant risk that the company would fail to be able to trade.”
But it adds: “However, the new management team have begun to address these historic issues and the board believes that a turnaround of the business is now underway and this additional financing will allow the company to meet its obligations and trade without working capital constraint.”
Last August high profile executive chairman and founder of the business, Pieter Totté, resigned from the company following a profit warning.
Totté founded Real Good Food in 2003 and acted as non-executive chairman until November 2009, when he assumed the role of executive chairman.
He had been named as one of two directors who received payments for consultancy services which had not been separately disclosed.
He received £253,000 in 2014, £336,000 in 2015 and £1.319m in 2016, £235,000 in 2017, and £30,000 in 2018.
Former director Peter Salter also received £50,000 in 2014, £31,000 in 2015, £15,000 in 2016, £94,000 in 2017, and £31,000 in 2018.
