TIDMRGD
RNS Number : 5373J
Real Good Food PLC
29 June 2017
For immediate release: 29 June 2017
Real Good Food plc
("the Company" or "Real Good Food")
Expansion Plan, Capital Raising, Related Party Transactions and
Update on Trading
Real Good Food plc (AIM: RGD) announces that it has raised a
total of GBP15.5 million of expansion capital (the "New
Investment") from a new investor and two existing shareholders by
way of both debt finance and new equity. This new injection of
capital will be raised by way of the issue of a secured loan note
instrument of up to GBP8.75 million (the "Loan Notes") from funds
managed and controlled by Downing LLP ("Downing"). The Loan Notes
are redeemable in full after three years. In addition to
subscribing for the Loan Notes, funds managed and controlled by
Downing have committed to subscribe for shares in Real Good Food of
10% of the issued share capital at a price of 35p per share raising
a further GBP2.75 million (together, the "Expansion Capital").
The Company has also secured two GBP2.0 million secured one year
term loan facilities from existing shareholders of the Company,
Napier Brown Holdings Limited and Omnicane Limited (the
"Shareholder Loans") in order to maintain an appropriate level of
working capital in the business.
Expansion Plan
In order to achieve its 2018 budget, and also to take advantage
of further growth opportunities, the Company has decided to embark
upon an expansion plan at two of its subsidiary companies, Renshaw
and Haydens (the "Expansion Plan").
The two main areas of investment are at Renshaw's Crown Street
site in Liverpool and Haydens in Devizes. Both these businesses are
seeing significant increases in forward demand; this has been
driven by international expansion and the launch of a mainstream
retail brand at Renshaw and the acquisition of two major new retail
customers at Haydens.
At Renshaw, the Company will invest approximately GBP7 million
in expanding capacity by over 50% as well as the installation of
new soft icings and discs production lines which support the
strategy to broaden the offering to mainstream users.
At Haydens, the acquisition of two new major customers has put
short term pressure on operational capacity and the Company will
therefore invest approximately GBP8 million in order to reconfigure
site operations, including blast freezing capability and the
installation of a new, automated Yum Yum line. This is expected to
take site capacity from its existing level of up to approximately
GBP30 million revenues to over GBP50 million of revenues.
Both of these investments, as well as increasing capacity, bring
significant benefits in efficiency, upskilling the workforce and
mitigating the impact of the forthcoming Living Wage increases.
The majority of the Expansion Plan is expected to be completed
by the end of September 2017 and is budgeted to cost approximately
GBP15 million in aggregate, with the additional capacity provided
by the Expansion Plan expected to commence delivering significant
financial returns from the financial year commencing 1 April
2018.
Funding the Expansion Plan
The Company investigated various options for raising investment
capital via its existing lenders in order to fund the Expansion
Plan, but the Board has concluded that in order to meet its current
desired investment strategy and timelines it needed to accelerate
the deployment of capital and so deemed it necessary to seek
alternative third party funding. The Company's existing debt
arrangements comprising Invoice Discounting ("ID") and asset
facilities with Lloyds Bank and ABN Amro remain unaffected. The
growth of export operations, which are not included in Lloyds' ID
facility, with the consequent requirements for stock has increased
short term working capital requirements.
The Expansion Plan will therefore be funded by a combination of
the Expansion Capital and existing cash resources of the Company.
In addition to the funding required for the Expansion Plan, the
Directors consider it appropriate to raise the Shareholder Loans in
order to provide additional working capital headroom for the
Company.
The New Investment
The Board concluded that in order to meet its current and
longer-term investment strategy and to enable it to create further
shareholder value, it required additional investment capital to
fund growth. After exploring a number of options, the Board is
delighted to have found a long term strategic partner in Downing,
who are committed to the longer term future of the business, and
who can provide capital to meet the needs of the business in a
flexible, bespoke way through a combined debt and equity
solution.
The Company is therefore pleased to announce that Downing is
providing the Loan Notes. The Loan Notes are available for drawdown
in two tranches; with initial drawdown of with GBP7.25 million and
the balance capable of drawdown following the issue all the shares
which Downing has committed to subscribe for as detailed below. The
Loan Notes have an interest rate of 6.5%, payable quarterly and are
secured against the Company's assets, subject to an intercreditor
agreement between each of Downing, Lloyds Bank plc, Lloyds Bank
Commercial Finance Limited, Napier Brown Holdings Limited and
Omnicane Limited. There is also a 3% annual non utilisation fee to
the extent that the Loan Notes are not fully drawn.
Additionally, Downing have been granted the right to appoint a
new Non-Executive Director to the Board and hence the Directors are
also delighted to appoint Judith Mackenzie to join them on the
Board of the Company with immediate effect.
Additionally Downing has agreed to subscribe for 7,844,924 new
ordinary shares of 2 pence each in the Company (the "New Shares")
at 35 pence each (the "Placing Price") to raise gross proceeds of
approximately GBP2.75 million (the "Placing"). The Placing Price
represents a 4.1% discount to the closing mid-market price of a
Real Good Food share on 28 June 2017, being the last practicable
day prior to this announcement and the New Shares will, when
issued, represent 10% of the Company's overall issued share
capital.
The Directors have authority to allot 3,500,000 of the New
Shares based on existing authorities but the allotment of the
balance (4,344,924) of the New Shares is conditional, inter alia,
upon the Company obtaining approval of the Shareholders at a
General Meeting to grant the Directors the authority to allot such
Placing Shares, to be held on 21(st) July at 30 Portland Place,
London W1B 1LZ (the "General Meeting"). A circular will be posted
to shareholders shortly giving further detail on the reasons for
the Placing and the use of proceeds in support of the resolution to
be proposed at the General Meeting. The Company has received
irrevocable undertakings to vote in favour of the resolution to
grant the Directors to allot the balance of the New Shares from
certain shareholders in respect of their entire beneficial and
direct holdings of existing ordinary shares of 2 pence each in the
Company ("Ordinary Shares") totalling, 46,204,920 Ordinary Shares,
and representing approximately 65 per cent of the existing ordinary
share capital of the Company.
Accordingly, application will shortly be made for 3,500,000 New
Shares to be admitted to trading on AIM ("Admission"). Admission is
expected to be effective at 8.00am on Wednesday 5 July 2017.
Following Admission, the Company's issued share capital is
74,104,317 Ordinary Shares. The above figure of 74,104,317 may be
used by shareholders as the denominator for the calculations by
which they will determine if they are required to notify their
interest in, or a change to their interest in the Company under the
FCA's Disclosure and Transparency Rules.
Shareholder Loans and Related Party Transaction
Pursuant to the terms of the Shareholder Loans, each of Napier
Brown Holdings Limited and Omnicane Limited, both substantial
shareholders of the Company, is providing a secured GBP2.0 million
loan facility with identical terms and conditions, which is
available immediately on a drawdown basis and supplements the
Company's existing cash resources and banking facilities to provide
additional working capital headroom. The Company investigated
various options for raising additional capital to provide further
headroom but was unable to do so within the requisite timeframe or
on terms that were agreeable to the Board. The Shareholder Loans
will incur a coupon at a rate equal to 6.5% per annum and, as each
of Napier Brown Holdings Limited and Omnicane Limited are
substantial shareholders of the Company and have Board
representation, each of the Shareholder Loans is deemed to be a
related party transaction pursuant to the AIM Rules for Companies.
The Company, Napier Brown Holdings Limited, Omnicane Limited and
Downing, have agreed that, in the event of a repayment of the
Shareholder Loans, 50% of the amounts repayable to the shareholders
shall also be paid to Downing as a partial redemption of its Loan
Notes.
Pieter Totté, David Newman, Christopher Thomas and Peter Salter,
the Independent Directors of the Company, consider that, having
consulted with the Company's Nominated Adviser, finnCap Ltd, the
terms of the Shareholder Loans to be fair and reasonable insofar as
the Company's shareholders are concerned.
Update on Trading
The Company intends to announce Final Results for the Year
Ending 31 March 2017 in July and expects to report revenues of
approximately GBP109 million and EBITDA of between GBP5.0 and
GBP5.4 million, following the previously announced impact on its
Food Ingredients Division of the volatile commodity markets and
currency fluctuations as a result of the Brexit vote. Net Debt at
the period end was GBP16.2 million. This figure was higher than
previous expectations in part due to pre-payments on capital
equipment for the Expansion Plan.
In the first nine weeks of the new financial period, the Company
has experienced strong growth in revenues across all three of its
operating divisions.
In the nine weeks to the 4(th) June 2017, sales were 15% up on
the previous year in Cake Decoration, 9% up in Premium Bakery and
87% up in Food Ingredients following the Brighter Foods acquisition
(like-for-like sales in Food Ingredients increased by 17%). EBITDA
for the same period was 56% ahead of the previous year.
While the first half of the year is traditionally the Company's
quietest period, trading to date is consistent with meeting the
Board's expectations for revenue and EBITDA for the year ending
31(st) March 2018.
Pieter Totté, Executive Chairman of Real Good Food,
commented:
"As we have already advised shareholders, we believe that there
is a significant opportunity to invest in our operating
subsidiaries to drive more efficiencies, customer growth and
improve operating margins, which ultimately will accelerate the
Company's organic growth. We have already embarked upon this within
our Cake Decorating division and are seeing positive results in
order intake at Renshaw and Rainbow Dust. The Board has taken the
decision to raise the Expansion Capital on order to enable us to
accelerate our investment programme into other divisions, including
a major increase in capacity at our Haydens site within the Premium
Bakery.
"We believe this is the first significant step in funding a
major medium term investment programme which will secure our
competitive position for the longer term and ultimately will drive
future returns for shareholders."
The following information regarding Judith Anne Mackenzie, aged
44, is disclosed under Schedule 2(g) of the AIM Rules for
Companies:
Current directorships and/or partnerships
Downing LLP
The Quoted Companies Alliance
Previous directorships and/or partnerships
(within last five years)
The Kirkhouse Limited
The Research Centre
Acuity Capital LLP
Essential Viewing Systems Limited
Judith Mackenzie was previously a Director of Oled-T Limited, to
which Administrators were appointed in September 2008.
As at the date of this announcement, Judith Mackenzie is not
beneficially interested in any Ordinary Shares in the Company.
There are no other disclosures that are required to be announced
under Schedule 2(g) of the AIM Rules for Companies.
-Ends-
The information communicated within 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.
About Real Good Food plc
Real Good Food plc is a diversified food business serving a
number of market sectors including retail, manufacturing,
wholesale, foodservice and export. The Group focuses on three main
markets: Cake Decoration (Renshaw, Rainbow Dust Colours), Food
Ingredients (Brighter Foods, Garrett Ingredients and R&W Scott)
and Premium Bakery (Haydens and Chantilly Patisserie).
ENQUIRIES:
Real Good Food plc
Pieter Totté, Executive Chairman Tel: 020 38573900
David Newman, Finance Director
Andrew Brown, Marketing Director
finnCap Ltd (Nomad and Broker)
Matt Goode Tel: 020 7220 0500
Carl Holmes
Daniel Stewart and Company Plc (Joint Broker)
David Lawman Tel: 020 7776 6550
Belvedere Communications (PR)
John West Tel: 020 3567 0510
Kim van Beck
This information is provided by RNS
The company news service from the London Stock Exchange
END
ARIOKCDQPBKKCAB
(END) Dow Jones Newswires
June 29, 2017 02:01 ET (06:01 GMT)
Real Good Food (LSE:RGD)
Graphique Historique de l'Action
De Juin 2024 à Juil 2024
Real Good Food (LSE:RGD)
Graphique Historique de l'Action
De Juil 2023 à Juil 2024