Real Good Food PLC Funding Update (0476J)

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RNS Number : 0476J

Real Good Food PLC

27 March 2018

For immediate release: 27 March 2018

Real Good Food plc

("Real Good Food", "the Company" or "the Group")

Funding Update

Real Good Food today announces an update on its funding. As announced at the time of issuing the Group's Interim Results on 22 December 2017, the Board had identified that further substantial additional funding will be required over the coming months for working capital and investment purposes in order to implement the Group's business plan. The Board continues to explore the detail of financing this requirement, including the issue of new equity.

As announced on 31 January 2018, the Group's three major shareholders, Napier Brown Ingredients Limited ("NB Ingredients Ltd"), Omnicane International Investors Limited ("Omnicane"), and certain funds managed by Downing LLP ("Downing") continue to demonstrate their support for the Group. They have today executed a term sheet, to that end, to provide additional funds to support the Company's working capital requirements, in the form of a draw-down loan note facility of up to GBP4.0m in aggregate (the "Loan Notes"), with Omnicane and NB Ingredients Ltd each providing up to GBP1.713m and certain funds of Downing LLP providing GBP0.574m (the "Shareholder Loans"). These funds will relieve pressure on cash availability over the coming months whilst longer term funding arrangements are put in place.

Hugh Cawley, Chief Executive, said:

"Today's additional funding is an important part of meeting our short-term requirements, and further funding will be required for working capital and investment purposes in order to implement the Group's business plan. The raising of these Loan Notes is part of the longer term funding plan being pursued by the Group."

The terms and conditions of the Loan Notes are as follows:

 
Principal:        Up to GBP4.0m in aggregate 
Interest:         10% per annum, payable quarterly in arrears 
Redemption:       Redemption of the Loan Notes will be 30 June 2018, at par, or earlier upon the occurrence 
                   of certain events of default 
Transferability:   The Loan Notes shall be transferable. 
Undertakings:     The Company undertakes to use all reasonable endeavours to refinance the Loan Notes with new 
                   equity or convertible loan notes on such terms as to be agreed at the date of redemption and 
                   to obtain grant of a waiver from The Panel on Takeovers and Mergers from any obligation that 
                   might arise under Rule 9 of the City Code from the raising of new equity or the conversion 
                   of the new convertible loan notes by the Subscribers ("Whitewash"). 
                   In the event that the Loan Notes are not refinanced with new equity or convertible loan notes 
                   as a result of the Whitewash not being received, the Company will be responsible for the costs 
                   associated with the Whitewash procedure and the Subscribers shall be entitled to payment of 
                   a penalty rate of interest, in cash, equivalent to 20% of the principal and interest due. 
                   The Company undertakes to use all reasonable endeavours to obtain such authorisations as may 
                   be necessary from shareholders in due course to facilitate the refinance of the Loan Notes 
                   via new equity or convertible loan notes. 
                   The Company undertakes to use all reasonable endeavours to agree with the Subscribers a future 
                   capital restructuring (the "Capital Restructuring"). The Capital Restructuring will be in 
                   a form such that the Directors will be in a position to make a working capital statement in 
                   form set out in Schedule Two (c) of the AIM Rules for Companies. 
 

Shareholder Loans and Related Party Transactions

As each NB Ingredients Ltd, Omnicane and Downing 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 Board has considered alternative forms of funding but has concluded that these options are not available to the Company in the required timeframe and that the Loan Notes therefore provide the most appropriate and flexible option to meet the Company's short-term cash requirements.

Hugh Cawley, Harveen Rai and Christopher Thomas (the Directors of the Company who are Independent for the purpose of considering this), having consulted with the Company's Nominated Adviser, finnCap Ltd, consider the terms of the Loan Notes to be fair and reasonable insofar as the Company's shareholders are concerned.

-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.

ENQUIRIES:

Real Good Food plc

Hugh Cawley, Executive Director Tel: [phone]

Harveen Rai, Finance Director

finnCap Ltd (Nomad and Broker)

Matt Goode Tel: [phone]

Carl Holmes

 
     MHP Communications (Financial      Tel: [phone] 
      PR)                                     [e-mail] 
      Reg Hoare / Katie Hunt 
 

Abut 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).

This information is provided by RNS

The company news service from the London Stock Exchange

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March 27, 2018 04:25 ET (08:25 GMT)