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Real Good Food secures new lending arrangements from three main shareholders

The company said its three major shareholders have agreed to provide additional funds to support its working capital needs of £3.0mln in loan notes
Real good cakes
The funding news came with the AIM listed firm’s interim results which showed a significantly widened loss

Real Good Food PLC (LON:RGD) revealed on Friday that a series of new lending arrangements have been put in place by the group's three main shareholders to secure the business.

The company said its three major shareholders have agreed to provide additional funds to support its working capital needs of £3.0mln in loan notes, which will relieve pressure on cash availability over the coming months whilst it seeks out longer term funding arrangements.

Real Good Food shares closed 2.3% higher on Friday at 22p each.

READ: Real Good Food hurt by rising raw material costs

The funding news came with the AIM listed firm’s interim results which showed a significantly widened loss due to increased costs arising from delays in major investment projects.

The food manufacturer and distributor reported a pre-tax loss of £6.7mln for the six months ended 30 September 2017, compared to a £900,000 loss for the same period a year earlier.

The group’s first half revenue was up 30% to £63.6mln, from £49.0mln in the previous year, but administrative costs for the period totalled £12.8mln, up from £10.2mln in 2016.

The company also incurred significant costs related to responding to corporate governance and regulatory shortcomings, acquisition costs for Brighter Foods, one time costs of capital projects, and the impairment of goodwill in the food ingredients division.

Real Good Food’s interim chairman, Pat Ridgwell commented: “This has been an extremely difficult period for the company. The acquisition of Brighter Foods and investments in new capacity and greater efficiency at both Renshaw and Haydens were pursued in advance of suitable financing arrangements being completed leading to cash shortages and delays in the implementation of these projects.”

He added: “Serious failings in corporate governance under the previous regime also became apparent as announced in September 2017, have required significant resources and costs to rectify and resulted in a number of key board changes in order to strengthen the efficacy of the board and improve the company's internal processes". 

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