Shareholders in Haydens and Renshaw owner Real Good Food have agreed to give the business a £4m short-term debt facility.
The move comes three weeks after the business announced it had secured a £2m overdraft facility with Lloyds Bank after discovering a shortfall in its finances, with Real Good Food (RGF) shareholders NB Ingredients and Omnicane Limited each putting up £1m as security.
At the end of last month, RGF reduced its earnings expectations for the financial year ended 31 March 2017 to £1m. This was half the figure suggested by the business earlier last month, which was itself around £3m lower than previously forecast.
Today (21 September), RGF said Omnicane, NB Ingredients and funds managed by Downing LLP would provide a loan of up to £4m, with each shareholder participating equally.
The funds will be used to boost cash availability as the company builds up stock in the run-up to the Christmas trading period, and as its capital investment programme continues.
RGF today announced that the first part of an £11m investment in Haydens, a yum yum line, had gone live and delivered its first product last week.
The company added that one of two new lines at Renshaw was producing stock for the Christmas period, and that a new jam line at R&W Scott had started to deliver product to a retailer.
It added that the remaining investment in manufacturing lines at Renshaw and Haydens was due to be completed by the end of December this year.
Today’s announcements comes a week after RGF vowed to improve its corporate governance and reporting after payments were made to two directors for consultancy services but not properly disclosed in transaction notes for the company’s accounts in 2014 to 2016.
The RGF board said it would be appointing external advisers to conduct a review of the company’s corporate governance and financial reporting procedures, and would make a further announcement when the review had been completed and “any necessary changes implemented”.
Based on overall trading year to date, the board said it expected the company to achieve an EBITDA of £6.5m in the year to 31 March 2018.