Liverpool / UK. (rgf) British Real Good Food Company PLC (RGF) announces that it has completed the sale of R+W Scott Limited to its management team (the MBO). The Group will receive consideration of GBP 3.95 million as a result of the MBO, payable by means of a cash payment of GBP 1.50 million, GBP 0.5 million of which is deferred until 30 September 2019, and the assumption by R+W Scott’s management team of GBP 2.45 million of third-party debt.
R+W Scott has been producing jams and preserves for over 130 years and is based out of Carluke in Lanarkshire, Scotland. R+W Scott also manufactures chocolate flavoured coatings, sweet and savoury spreads and speciality soft icings, servicing a number of sectors including retail, foodservice and wholesale customers worldwide and has been a part of the Group since the Group’s inception.
In the Group’s financial year ended 31 March 2017, R+W Scott contributed GBP 10.36 million of revenue, and incurred a loss before non-recurring items and tax of GBP 1.22 million, and a pre-tax loss of GBP 3.3 million, closing that year with net assets of GBP 1.89 million. The Group expects to incur an accounting loss for the Group on disposal of approximately GBP 3.0 million and a write down of parent company reserves at 31 March 2019 of approximately GBP 5.0 million.
Use of proceeds – Group financial position transformed
The initial cash proceeds received will be utilised for working capital purposes. In total, the three disposals completed since the year end of Garretts, Haydens and R+W Scott have raised a total consideration of GBP 17.8 million, of which GBP 10.1 million has been received in cash, GBP 7.2 million has been the assumption of third-party debt and GBP 0.5 million is deferred.
Together with the Open Offer to raise GBP 1.0 million completed in August, and the funding arrangements put in place in June 2018, the Group’s financial position has been transformed this calendar year, eliminating term debt with the bank and providing working capital for continuing general requirements as well as growth.
Reasons for and benefits of disposal
Following a process of exploring strategic options for the R+W Scott business, the MBO offered the best route to maximising value from the business, whilst disposing of this non-core asset.
Having disposed of R+W Scott, Garretts and Haydens, RGF has now completed the significant corporate activity intended as the first part of its strategy, and management is able to focus its attention and resources on growing the two main continuing, profitable businesses which together now comprise the majority of the Group, Cake Decoration and Brighter Foods.
RGF was advised by Spayne Lindsay + Co. LLP on the transaction.
Chief Executive’s statement
Hugh Cawley, Chief Executive, said: «This disposal, alongside those of Haydens and Garretts, marks a significant milestone in the turnaround and performance improvement programme of Real Good Food. We are now able to focus on the core continuing businesses, Brighter Foods and Cake Decoration, with no bank term loan and a fully funded growth plan.
«Overall, through the actions of the last twelve months, the performance of, and prospects for, what is now a smaller and more focused Group, have improved considerably. The Company now has a solid platform from which to maximise earnings and look to optimise shareholder value.»
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