Real Good Food PLC Terms agreed for new funding (2269N)
05 May 2018 - 12:43AM
UK Regulatory
TIDMRGD
RNS Number : 2269N
Real Good Food PLC
04 May 2018
Real Good Food plc
("the Company")
Terms agreed for new funding
The Company announces today that it has agreed terms for at
least GBP8.2 million in new financing arrangements with the
Company's three major shareholders, Napier Brown Ingredients
Limited ("NB Ingredients Ltd"), Omnicane International Investors
Limited ("Omnicane"), and certain funds managed by Downing LLP
("Downing") subject to finalisation of standard documentation.
This follows our previous statements, most recently in an
announcement on 27 March 2018, 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.
In addition, the Company is due to pay the final tranche of
consideration due to the vendors of Brighter Foods of approximately
GBP4.5 million ("Deferred Consideration") later this month, as
previously detailed in the announcement of the acquisition of
Brighter Foods on 5 April 2017.
The financing arrangements will not only fund this GBP4.5
million Deferred Consideration, but also provide a maximum of
GBP4.2 million to fund the Company's foreseeable working capital
needs, including for the build-up of inventory in advance of the
Group's third quarter in October to December, which is typically
its busiest.
The funding described above is to be provided by means of
secured loan notes, with an annual coupon of 12% from the three
major shareholders (the "Shareholder Loans").
It is intended that the Shareholder Loans will be replaced by
convertible loan notes (the "Replacement CLNs") in due course, with
the issue of such Replacement CLNs being subject to a whitewash
process pursuant to Rule 9 of the Takeover Code. The conversion
price of the Replacement CLNs is expected to be 5 pence,
significantly lower than the Company's current share price. The
Shareholder Loans will carry a redemption premium payable on any
repayment which, when added to interest already received, will
generate a total annualised return of 30%. In the event of
conversion of the initial principal amount, then no redemption
premium will be payable.
These terms are reflective of the severe financial challenges
the company has faced over the last twelve months. 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. Without this funding
the Directors believe that there is a significant risk that the
Company would fail to be able to trade. 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.
The Board considers that a fundraising by way of the Shareholder
Loans is the most appropriate route for the Company to raise the
capital it needs in the timescale available.
As each of NB Ingredients Ltd, Omnicane and Downing are
substantial shareholders of the Company and have Board
representation, each of the Shareholder Loans, once agreed will be
deemed to be a related party transaction pursuant to the AIM Rules
for Companies.
Further announcements will be made in due course.
The information communicated in this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Enquiries:
Real Good Food plc Tel: 020 3857 3900
Hugh Cawley, Chief Executive
Harveen Rai, Finance Director
finnCap Limited (Nomad Tel: 020 7220 0500
and Broker)
Matt Goode / Carl Holmes
(Corporate Finance)
MHP Communications (Financial Tel: 020 3128 8100
PR) rgf@mhpc.com
Reg Hoare / Katie Hunt
About Real Good Food
Real Good Food plc is a diversified food business
serving a number of market sectors including
retail, manufacturing, wholesale, foodservice
and export. The Company focuses on three main
markets: Cake Decoration (Renshaw and Rainbow
Dust Colours), Food Ingredients (R&W Scott and
Brighter Foods) and Premium Bakery (Haydens
and Chantilly Patisserie).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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