Real Good Food plans to cancel £71.3M debt
The Liverpool-based food manufacturer will ask shareholders to approve the proposal to restructure the balance sheet of the company by cancelling the share premium account at its annual general meeting on September 23.
The firm said: “Subject to the approval of shareholders at the general meeting and the confirmation of the High Court, it is intended that the company cancel the amount standing to the credit of the share premium account, £71.272M, and apply the reserve arising on the cancellation to eliminate the accumulated deficit on the company’s profit and loss account.
“To the extent that the capital cancellation exceeds the deficit, it will result in positive distributable reserves.”
High Court approval
As a condition to approving the capital cancellation, the High Court will need to be satisfied that the interests of the company’s creditors are not adversely affected.
Under English law, a company may reduce or cancel its share capital (including its share premium account) and apply the reserve arising on the reduction against an accumulated deficit on its profit and loss account provided that shareholder approval and High Court confirmation.
Previous corporate activity had left the company with a deficit to distributable reserves but a significant positive balance to share premium account, it claimed.
This included its acquisition of Rainbow Dust Colours Limited in January 2015 and the sale of Napier Brown Sugars in May 2015.
£3.4M from Napier Brown deal
The firm has also received a further and final £3.4M from Tereos Group on completion of the sale of Napier Brown Sugar Limited.
This £3.4M represents the increase in the working capital figure over the initial £7M estimate, and is based on the completion accounts, making the total working capital payment received from Tereos £10.4M.
Pieter Totté, executive chairman of Real Good Food, said: “The total consideration for the sale of Napier Brown is £44.4M. The deal has significantly altered the financial platform from which the company can now operate.
“We have positive cash balances and are cash generative and profitable. We look forward with great optimism.”
Real Good Food Company focuses on three main markets: cake decoration (Renshaw, Rainbow Dust Colours), food ingredients (Garrett Ingredients and R&W Scott) and premium bakery (Haydens).
