Real Good Food aims to raise extra £1m funding

Renshaw and Haydens owner Real Good Food is hoping to raise £1m of extra working capital with an open share offer.

The move comes a month after the business announced it had secured £8.2m in financing, admitting at the time that there was a “significant risk” it would not be able to trade without the funding.

Real Good Food (RGF) is experiencing a turbulent period that has included a shake-up of its board and an overhaul of its corporate governance procedures. It has also warned it expects to make a £3.5m earnings loss this year. (See timeline below.)

Under the new offer, qualifying shareholders are being given the opportunity to subscribe for new ordinary shares of 2p each.

The company’s major shareholders Napier Brown Holdings, Omnicane and certain funds of Downing LLP, who have provided funding including the £8.2m, do not intend to take up their entitlement under the open offer.

"Having recently completed our new financing arrangements with the company's three major shareholders, the board recognised the importance of enabling all shareholders to participate in the refinancing of the company and is therefore intending to launch the open offer accordingly,” said RGF chief executive Hugh Cawley.

RGF also announced it is looking for two new independent non-executive directors as part of its improved corporate governance practices.

Real Good Food timeline

1 August 2017

  • RGF announces earnings for 2017 will be £2m, around £3m lower than previously forecast, and that profits in 2018 will be lower than expected.
  • RGF also reveals that payments for consultancy services made to executive chairman Pieter Totté and non-executive director Peter Salter have not been disclosed in transaction notes for accounts in 2014 to 2016, but have been accounted for.
  • Salter, chairman of RGF audit and remuneration committees, resigns.

8 August

  • Founder and executive chairman Pieter Totté resigns and steps down from the board with immediate effect.
  • Non-exec director Pat Ridgwell becomes interim chairman, while non-exec director Christopher Thomas becomes executive director.
  • Finance director David Newman is replaced by Harveen Rai, but remains with the company for a changeover period.
  • New non-executive director Hugh Cawley joins the board to head RGF’s audit committee, while non-exec director Judith Mackenzie becomes head of the remuneration committee.

16 August

  • RGF secures a £2m overdraft facility with Lloyds Bank after a re-forecasting exercise finds a “short-term working capital requirement” as the business builds up stock ahead of Christmas and proceeds with previously announced investment programmes at Renshaw and Haydens.

29 August

  • RGF further reduces profit expectations for 2017 to £1m.

14 September

  • RGF says it is committed to improving its corporate governance and reporting, admitting standards have been below those investors “might reasonably expect”, adding it is “committed to rectifying this important aspect of operations and disclosure”.

21 September

  • Shareholders agree to give the business a £4m short-term debt facility.

October

  • RGF reports a £5.8m loss in the 12 months ending 31 March 2017, despite a £7.8m year-on-year increase in group sales to £108.2m. The loss is attributed to factors including “the effect of currency exchange on key commodity prices and poor financial control of central costs”.

December

  • RGF announces revenue up 30% year on year to £63.6m in the six months ending 30 September 2017, although it made a £6.7m pre-tax loss compared with a £0.9m loss in the same period the previous year.
  • Shareholders agree to provide an initial £3m of additional funds, while longer-term funding arrangements are put in place.

January 2018

  • RGF warns it is set to make £3.5m earnings loss following poor trading at end of 2017

March

  • Major shareholders agree to provide up to an additional £4m funding.

April

  • Kent Foods Limited buys Garrett Ingredients business from RGF.

May

  • RGF announces further £8.2m financing from major shareholders Napier Brown Ingredients, Omnicane International Investors, and funds managed by Downing LLP, stating that, without this, there was a “significant risk” it would not be able to trade.

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