REG - Real Good Food PLC - Additional Funding and Trading Update

Real Good FoodAnnouncement

06/04/2023 07:00

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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 £550,000 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 £2.5 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 £2 million to £4 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
£25.9 million, including accrued interest and redemption premiums. In
addition, there is a £2.6 million loan from Hilco Private Capital Ltd and a
term loan of £0.7 million from Leumi ABL. The Group also has a £5.5 million
invoice discount facility with Leumi, £2.4 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

 Mike 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 (mailto:rgf@mhpc.com)

 

 

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