Haydens and Renshaw owner Real Good Food has secured a further £8.2m financing – and stated that, without this, there was a “significant risk” it would not be able to trade.

The funding is to come from Real Good Food’s (RGF) three major shareholders, Napier Brown Ingredients, Omnicane International Investors, and funds managed by Downing LLP, which have previously supplied the business with additional financing on a number of occasions.

The funding issues have followed a troubled period for RGF that has included a shake-up of its board and an overhaul of its corporate governance procedures. In January, the company warned it was set to make a £3.5m earnings loss following poor trading at the end of last year, and last month it sold its Garrett Ingredients business to Kent Foods Limited.

Around £4.5m of the new funding will be used to make the final payment for the Brighter Foods snack bar business, acquired by RGF a year ago.

In addition, up to £4.2m will be used to fund the company’s foreseeable working capital needs, including inventory build-up ahead of RGF’s busiest period, which is October to December.

The new funding is being provided through secured loan notes, with an annual coupon of 12% from the three shareholders, and it is intended these will be replaced by convertible loan notes. The shareholder loans will carry a redemption premium that, when added to interest already received, will generate a total annualised return of 30%. In the event of conversion of the initial principal amount, no redemption premium will be payable.

RGF said these terms reflected the “severe financial challenges” the company has faced over the past 12 months.

“Without this funding, the directors believe there is a significant risk that the company would fail to be able to trade,” it stated. “However, the new management team believes that a turnaround of the business is now under way and this additional financing will allow the company to meet its obligations and trade without working capital constraint.”