RGD.L Regulatory News (RGD)

Real Good Food plc

("RGF" or "the Group")

Amendment to Shareholders' Agreement

Related Party Transaction

Real Good Food plc (AIM:RGD) announces that it has today entered into a deed of variation (the "Deed") that amends the terms of the shareholders' agreement dated 4 April 2017 (the "SHA") between, amongst others, (i) the Group and (ii) each of Robin Williams, Lynn Regan and Carwen Jones (together the "Minority Shareholders") that regulates their relationship in relation to Brighter Foods Limited ("Brighter") - the Group holds 84.34% and the Minority Shareholders hold 15.66% of the issued share capital of Brighter ("Minority Interest").

The Board of RGF believes that the Deed is in the best interest of all stakeholders as it reduces the immediate cash outflow of the Group and aligns the interests of the Minority Shareholders (who form part of the core management team of Brighter Foods) with RGF in improving earnings and ultimately maximising the value of the business to RGF. It also confirms the confidence of the Minority Shareholders in the strength and resilience of the business and the potential it has within the snack bar segment.

Under the terms of the SHA, a put option pursuant to which the Minority Shareholders can compel the Group to acquire 50% of the Minority Interest has become exercisable (the "2020 Option"). The price to be paid by the Group based on EBIT and cash flows of Brighter for the year ended 31 March 2020 is approximately £2.8m (the "2020 Payment").

Pursuant to the Deed the Minority Shareholders have agreed, amongst other things, to forego their right to exercise the 2020 Option, with the SHA being amended such that the Minority Shareholders will now have a put option over the whole of the Minority Interest exercisable following the agreement of the audited accounts of Brighter for the year ending 31 March 2021 (the "2021 Option"). The Group retains its call option over the whole of the Minority Interest, exercisable should the 2021 Option not be exercised.

In consideration for the changes to the SHA being made by the Deed, the Group has agreed to pay the Minority Shareholders £1.0m on the date the Deed is entered into and a further £500,000 on 20 November 2020. The outstanding balance of the 2020 Payment, approximately £1.3m, has been deferred until the exercise of the 2021 Option. Interest becomes payable on the £1.3m at the rate of 10% from March 2021.

Furthermore, it has been agreed that in the event of a corporate action relating to Brighter which completes in the six months following the exercise of the 2021 Option, the Group will pay to the Minority Shareholders a sum equal to the amount by which the consideration they would have received had they sold their Minority Interest in that corporate action is greater than the consideration actually received pursuant to the 2021 Option.

As Robin Williams is a director of Brighter, a subsidiary of RGF, entry into of the Deed constitutes a related party transaction pursuant to the AIM Rules for Companies. The Board of RGF (all being independent for the purposes of the related party transaction) having consulted with the Group's nominated adviser, finnCap, consider the terms of the Deed to be fair and reasonable insofar as the Group's shareholders are concerned.

Mike Holt, Chairman commented:

"Brighter has remained profitable and cash generative during recent challenging months, demonstrating its resilience and the benefit of having a lean and flexible cost base but to preserve cash for the Group until Covid-19 abates this is considered a fair and balanced agreement between the Group and the Minority Shareholders. It also further aligns the interests of Brighter's management team with value creation for the Group "

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

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