Real Good Food calls in turnaround expert to ‘explore all possible options’
Liverpool-based cake decoration specialist, Real Good Food Group, has appointed turnaround experts, Interpath Advisory, to advise on its future.
As part of a review into the business, it is considering an outright sale, or sourcing new external funding in a bid to continue trading.
It said the business is affected by supply issues and cash constraints, and revealed that sales in November and December – its busiest trading period on the run-up to Christmas – are now expected to be lower than previously forecast.
The group announced the sale today (November 17) of its Rainbow Dust Colours division, for £800,000 in cash, to European Fermentation Products, to raise much needed capital for the remaining JF Renshaw business.
However, a condition of the sale is that £220,000 of the proceeds from the disposal will be used to pay down a proportion of the Hilco Private Capital secured loan facility.
The assets being sold include plant and machinery, inventory, domain names and trademarks.
The sale is expected to make a profit of circa £325,000 against book value for the company. In the year to March 31, 2023, RDC reported a break even result at EBITDA level.
Real Good Food said today that, in conjunction with the disposal, the board has carefully reviewed its management accounts and working capital position, as well as the expected sales in November and December.
As noted in the trading update on October 31, 2023, performance has been constrained by supply issues and cash constraints. These are continuing and sales in November and December are now expected to be lower than previously forecast.
This has led to the board to conclude that it is in the best interests of all stakeholders to explore strategic options for its remaining business, JF Renshaw.
It said the board of JF Renshaw has, consequently, resolved to appoint Interpath Advisory as its adviser to assist with the review of all strategic options, given a challenging environment for the company and the cash flow constraints, which may include the sale of the shares or the business and assets of JF Renshaw as well as sourcing necessary external funding.
Real Good Food executive chair, Mike Holt, said: “We have made substantial progress over the last year.
“The radical reform programme has delivered significant benefits and recent senior management changes have also made a real difference.
“The group, however, is struggling to meet demand through supply issues and cash constraints. The board together with JF Renshaw is exploring all possible options and is working closely with Interpath Advisory to determine the best way forward.”