Real Good Food PLC New funding arrangements agreed (4220O)
17 May 2018 - 7:30PM
UK Regulatory
TIDMRGD
RNS Number : 4220O
Real Good Food PLC
17 May 2018
Real Good Food plc
("Real Good Food", "the Company" or "the Group")
New funding arrangements agreed
The Company announces today that, following its announcement on
4(th) May that it had agreed terms for at least GBP8.2 million in
new financing arrangements with the Company's three major
shareholders, Napier Brown Limited ("NB Ltd"), Omnicane Limited
("Omnicane"), and certain funds managed by Downing LLP ("Downing")
(together the "Noteholders"), it has now finalised the terms and
signed the relevant documentation to effect these new arrangements,
by means of secured loan notes, with Omnicane and NB Ltd each
providing GBP3.3m and certain funds of Downing LLP providing at
least GBP1.6m (with a further GBP0.5m provided at the sole
discretion of Downing prior to 30 September 2018) (the "Shareholder
Loans"). The further funds to be provided by certain funds of
Downing LLP are intended to provide the Group with further working
capital headroom.
The financing arrangements will fund the GBP4.5 million deferred
consideration due to the vendors of Brighter Foods, and also
provide up to GBP4.2 million (depending on whether the further
GBP0.5m is received from funds managed by Downing LLP) 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.
It is intended that the Shareholder Loans will be replaced by
convertible loan notes (the "Replacement CLNs") within 3 months,
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. A
redemption premium is payable on repayment of the Shareholder Loans
which, when added to interest already received, will generate a
total annualised return of 30%. In the event of the replacement of
the Shareholder Loans by the Replacement CLNs then no redemption
premium will be payable, but interest shall accrue on the
Shareholder Loans until they are replaced by the Replacement CLNs
at which point interest shall be paid or capitalised and added to
the principal amount of the Replacements CLNs.
In addition, the coupon on funding advanced to the Company by
the Noteholders being:
-- GBP7.25m in the case of Downing on 28 June 2017;
-- GBP2.0m in the case of each of NB Ltd and Omnicane on 28 June 2017; and
-- GBP1.0m in the case of each of NB Ltd and Omnicane on 16 August 2017;
will become 10% (from 6.5%) with effect from drawdown of the
first tranche of the Shareholder Loans (the "Rate Change").
All monies owed by the Company, J F Renshaw Limited and Haydens
Bakery Limited to the Noteholders (including current debt
instruments and not limited to the Shareholder Loans) are secured
over all the assets of those companies.
These terms are reflective of the severe financial challenges
the company has faced over the last twelve months. Without this
funding the Directors believe that there was a significant risk
that the Company would fail to be able to trade, but this
additional financing will allow the Company to meet its obligations
and trade without working capital constraint.
The key terms and conditions of the Shareholder Loans are as
follows:
Principal: Up to GBP8.7m in aggregate
Interest: 12% per annum, payable when the Loan Notes are repaid or capitalised
and added to the principal amount of the Replacements CLNs.
Redemption: Redemption of the Loan Notes on or before the date that is
36 months from today, at par, or earlier if prepaid or upon
the occurrence of certain events of default
Redemption A redemption premium is payable on repayment of the Shareholder
Premium: Loans which when added to interest already received will generate
a total annualised return of 30%. In the event of replacement
of the Shareholder Loans by the Replacement CLNs then no redemption
premium will be payable.
Transferability The Shareholder Loans shall be transferable
Undertakings: 1. Confirmation of continued support to the Company from its
bank in a form acceptable to the Noteholders, including confirmation
of use of proceeds of the Shareholder Loans.
2. An undertaking from the Company to use all reasonable endeavours
to: (i) obtain such approvals as are necessary from shareholders
to permit the issue and conversion of the Replacement CLNs
within 3 months of the first draw down of the Shareholder
Loans, including a whitewash to avoid a Rule 9 offer under
the Takeover Code.; and (ii) procure that the independent
directors of the Company recommend independent shareholders
vote in favour of the proposals and the whitewash.
3. An undertaking from the Company that prior to accepting
funding from third parties in the 18 months following draw-down
of the Shareholder Loans, the Noteholders will be given reasonable
notice of the proposed terms of such funding and the right
to provide that funding on those terms.
4. An undertaking that the Company shall use all reasonable
endeavours to agree with the Noteholders a future capital
restructuring (the "Capital Restructuring").
Shareholder Loans and Related Party Transactions
As each of NB Ltd, Omnicane and Downing are substantial
shareholders of the Company and have Board representation, each of
the Shareholder Loans and the Rate Change are deemed to be related
party transactions pursuant to the AIM Rules for Companies.
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. Hugh Cawley, Harveen
Rai and Christopher Thomas, the Independent Directors of the
Company for this purpose, having consulted with the Company's
Nominated Adviser, finnCap Ltd, consider the terms of the
Shareholder Loans and the Rate Change to be fair and reasonable
insofar as the Company's shareholders are concerned.
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 and Broker) Tel: 020 7220 0500
Matt Goode / Carl Holmes / James
Thompson (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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