Real Good Food PLC Additional Funding and Trading Update (5604V)
06 Avril 2023 - 8:00AM
UK Regulatory
TIDMRGD
RNS Number : 5604V
Real Good Food PLC
06 April 2023
6 April 2023
Real Good Food plc
("RGF" or "the Group")
Additional Funding and Trading Update
Real Good Food plc (AIM:RGD), the food manufacturing business
specialising in cake decoration, announces that it has secured a
GBP550,000 short-term loan from Downing LLP and Omnicane Investors
Ltd, two of its principal shareholders and loan note holders.
The funding supports the additional funding of GBP2.5 million
secured from Hilco Private Capital in November 2022. The new loan
notes rank behind Hilco and Leumi ABL but ahead of existing loan
notes. It is intended that the new loan notes will be repaid in
October 2023 as part of the refinancing of debt when the current
Hilco facility becomes due for repayment on 18 November.
Trading Update
As noted in its half year results announcement on 16 December
2022, market conditions remain very challenging due to the perfect
storm of rising costs and lower revenues during the currently
difficult economic period. The Group's radical reform programme,
however, is progressing well with significant price resets and cost
savings having been achieved. Our focus currently is on improving
manufacturing efficiency and balancing capacity to levels of
demand. However, Q4 revenue was below expectations, as consumer
demand and confidence were knocked by speculation in the media of a
recession in the early months of 2023.
As a result, and as previously stated, the Board expects to
report a loss for the year ended 31 March 2023, following losses in
the first half and further losses in the second half. The full year
benefit of the price resets and cost savings are expected to lead
to a significant performance improvement in the new financial year
commencing 1 April 2023 with EBITDA anticipated to be in the range
of GBP2 million to GBP4 million, and the Group being cash
generative. The additional funding reflects the Board's confidence
in the reforms being made.
Terms of the loan:
-- The loan is intended to be repaid when the Company
re-finances its current facility with Hilco Private Capital in
November 2023.
-- Interest rate of 12% (annualised), payable on repayment,
compounding monthly and 35% redemption premium.
-- If the loan is repaid later than 31 October 2023 and before
the 18 months from initial drawdown, 100% redemption premium and
accrued interest at 12%.
-- If the loan is repaid 18 months or longer after initial
drawdown, 200% redemption premium and accrued interest at 12%.
As Omnicane is a substantial shareholder of the Company and
Judith MacKenzie, a director of the Company, is a Partner of
Downing which is also a major shareholder of the Company, the
transaction constitutes a related party transaction pursuant to the
AIM Rules for Companies. The Independent Directors of RGF, being
Mike Holt and Andy Richardson (both being independent for the
purposes of the related party transaction under review), having
consulted with the Group's nominated adviser, finnCap, consider the
terms of the loan to be fair and reasonable insofar as the Group's
shareholders are concerned.
The new loan notes increase convertible loan notes and
shareholder loans to GBP25.9 million, including accrued interest
and redemption premiums. In addition, there is a GBP2.6 million
loan from Hilco Private Capital Ltd and a term loan of GBP0.7
million from Leumi ABL. The Group also has a GBP5.5 million invoice
discount facility with Leumi, GBP2.4 million of which is currently
utilised.
Mike Holt, Executive Chairman, said:
"Market conditions remain as challenging as when we last
reported in December 2022. However, our internal reform programme
is progressing well and, without relying on a market upturn, the
Board expects the Group to be both EBITDA profitable and cash
generative in the new financial year. After a tough start to 2023,
we are beginning to see early signs of some improvement in demand,
particularly within B2B and Wholesale markets."
Enquiries:
Real Good Food plc Tel: 0151 541 3790
Mik e Holt, Executive Chairman
finnCap Limited (Nomad and Broker) Tel: 020 7220 0500
Carl Holmes / Abigail Kelly (Corporate Finance)
MHP Communications (Financial PR) Tel: 020 3128 8793
Reg Hoare / Katie Hunt rgf@mhpc.com
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END
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