Liverpool food manufacturing business Real Good Food secures £2.5m cash lifeline weeks after warning of doubts over its ability to keep trading. Tony McDonough reports
Toxteth food ingredients manufacturer Real Good Food (RGF) has secured an additional £2.5m of funding as it battles to stabilise the business.
In a statement to the stock exchange in early October, RGF said there was “material uncertainty which may cast significant doubt” on its ability to keep trading as it battled with soaring costs.
RGF operates two businesses from its Liverpool factory. Renshaw offers cake ingredients such as sugar paste, marzipan and icings while Rainbow Dust Colours sells edible cake decorations and exports all over the world.
On Monday morning the firm, which trades on the Alternative Investment Market, issued a fresh statement saying it had “secured an additional £2.5m in funding to support its turnaround”.
This new funding is being provided by Hilco Private Capital for a term of 12 months and supplements the existing £6.3m facility with Leumi ABL.
Its statement said: ”The funding ranks behind the existing Leumi ABL facility and ahead of the loan notes in security. The blended interest rate for third party funding is expected to be 12.1%, based on current market rates.”
In October RGF said it was ready to cut more jobs on top of the 51 redundancies announced earlier this year. Costs have soared 30% in 2022 and it said it was dealing with daily supply shortages and “erratic deliveries”.
In its full-year results for the 12 months to March 31, 2022 RGF reported revenue had risen from £37.3m to £40.4m but pre-tax losses widened from £6.1m last year to £18.9m this year.
Speaking on Monday, executive chairman Mike Holt said: “We are delighted that new funding has been secured to support the radical reform of RGF which is intended to reduce costs, protect revenues and preserve the inherent value of the group.
“With support from both customers and employees, we are making good progress on the required reforms and several major customers have already agreed to significant price re-sets.
“We are confident that the right actions are being put in place to return the business to sustainable profitability and being cash generative.”