Real Good Food (LON:RGD) announced the successful raising of $15.5 million after a round of capital raising among new and existing investors.
The company, which specialists in baking and icing, had initiated the capital raising plans to secure additional funding and loans to aid its expansion.
Financier Downing will lend the group £8.75 million alongside an additional investment of £2.75 million at 35p per share.
Existing shareholders, Napier Brown and Omnicane, are also supplying £2 million each through secured loans of one year.
Pieter Totté, Executive Chairman of Real Good Food, commented:
“As we have already advised shareholders, we believe that there is a significant opportunity to invest in our operating subsidiaries to drive more efficiencies, customer growth and improve operating margins, which ultimately will accelerate the Company’s organic growth. We have already embarked upon this within our Cake Decorating division and are seeing positive results in order intake at Renshaw and Rainbow Dust.”
He added:”We believe this is the first significant step in funding a major medium term investment programme which will secure our competitive position for the longer term and ultimately will drive future returns for shareholders.”
According to the update, the company intends to focus its expansion efforts on developing its Renshaw’s Crown Street site in Liverpool and Haydens in Devizes, which it had highlighted as areas of its business where it was seeing “significant increases in forward demand”.
At its Renshaw location, the company intends to invest £7 million of the raised funds, with the view of expanding capacities by over half. Moreover, at its Haydens site, £8 million will be invested to help reconfigure operational capacity to ease the “short-term pressure” of two new customers.
Back in April, the food company announced their acquisition of a majority 84.33 percent stake in organic snack-maker Brighter Foods, as part of a deal worth £9 million.
At the time of the announcement, CEO Pieter Totté noted that the agreement would allow Real Good Food to expand its product range to suit the more health-conscious consumer.
The latest news has however failed to impress the market with shares in Real Good Food currently down 7.12 percent as of 10.03AM (GMT).