RGF, through its subsidiary NBF, has an 84% stake in the issued share capital of Brighter Foods, which operates a factory at the Pendre Industrial Estate, Tywyn, in Wales. The balance was owned by Brighter Foods's managers. RGF itself would therefore receive cash proceeds of £35.6m from the deal.
The net assets being disposed of amount to £17.3m, resulting in a profit on disposal of an estimated £20.4m. Brighter Foods claims to have the capacity to make a million bars a day for brand partners across the globe in the slimming, sport, organic, free-from and other markets.
In a statement, the RFG board said the disposal provided it with several benefits. It would allow the company to gain an attractive return on its investment in Brighter Foods, cut net debt, wipe out some of its pension deficit and provide additional financial flexibility to support its continuing growth.
Cake Decorations businesses
RFG said the disposal would leave it with Renshaw and Rainbow Dust Colours and two vacated properties held as assets for sale.
The Food & Drink team at law firm Walker Morris advised RGF on the deal, which, subject to shareholder approval, is expected to complete on 11 May 2021.
“We are very pleased with the disposal which crystallises substantial value for the Group and enables us to halve our debt burden at a stroke, whilst materially improving the funding of the pension scheme," said RGF executive chairman Mike Holt.
'Balance sheet restructuring'
It also provides a basis for further balance sheet restructuring, as we look to accelerate and maximise value within Renshaw and Rainbow Dust Colours.
“I would like to thank Richard Naish and his team at Walker Morris for their support and advice throughout this process, which enabled us to secure a good deal for Brighter’s sale.”
Richard Naish, head of food & drink at Walker Morris, said: “Food & drink has been a focus of the firm for 15+ years, which has enabled us to build an unrivalled knowledge base of doing these sorts of deals in the sector.
"It was a pleasure to support Real Good Food and the selling management team and I am sure that the business will continue to prosper under new ownership.”
Brighter Foods was founded by Robin Williams in 2014 along with a small team of dedicated and experienced people, delivering £10m in its first full year of trading.