17th Nov 2023 10:34
(Alliance News) - Real Good Food PLC shares plummeted on Friday after it announced the disposal of Rainbow Dust Colours and said it is "exploring all possible options" to decide the fate of remaining business JF Renshaw Ltd.
The stock was down 15% at 1.40 pence on Friday morning in London.
The Liverpool, England-based food manufacturer confirmed that cash constraints and supply issues have hurt its performance. Due to these ongoing problems, Real Good Food expects sales in November and December to be "lower than previously forecast".
The company also said it has sold Rainbow Dust Colours to European Fermentation Products Ltd for a total cash consideration of GBP800,000.
Real Good Food said this would help JF Renshaw, its remaining business, to fund its working capital "during the busy period in the run-up to Christmas and to leverage its recently completed, and successful, programme of radical reform".
One condition of the disposal, Real Good Food added, is that it will use GBP220,000 of the proceeds to pay down a proportion of JF Renshaw's secured loan facility with Hilco Private Capital.
The sale included the Rainbow Dust Colours business and "certain assets" including inventory, domain names and trademarks.
Real Good Food said that thanks to the aforementioned negative outlook and ongoing "challenging environment", it has decided to "explore strategic options" for JF Renshaw.
As a result, JF Renshaw, which manufactures baking and cake decoration products, has appointed Interpath Advisory to assist with the strategic review. Real Good Food warned that possible strategic options may include selling JF Renshaw's shares or business and assets, in addition to sourcing "necessary external funding".
"We have made substantial progress over the last year," said Executive Chair Mike Holt. "The radical reform programme has delivered significant benefits and recent senior management changes have also made a real difference.
"The group, however, is struggling to meet demand through supply issues and cash constraints. The board together with JF Renshaw is exploring all possible options and is working closely with Interpath Advisory to determine the best way forward."
By Emma Curzon, Alliance News reporter
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