World foods specialist Vibrant Foods has undertaken a multimillion-pound refinancing after “operational challenges” resulted in the group falling to significant losses.
Delayed accounts for 2021 show the Exponent-owned group fell to a £34.1m headline loss – on top of a £45.3m loss in 2020 – and an operating loss of £10.9m.
The accounts said this downturn continued into 2022 and early 2023.
This was driven by the group taking longer than anticipated to pass on sharp cost inflation across ingredients, energy, transport and warehousing – leading to “significant losses”.
As a result, it undertook a major refinancing exercise to provide sufficient funds to drive a turnaround.
The accounts say it has received £2m from financial institution Pemberton and is set to receive a further £12m, alongside an injection of £18m from Exponent.
The further £30m of funding is due to arrive by 31 August, subject to due diligence.
Although there is no expectation the due diligence will cause any issues, the group’s auditor noted any failure to secure the funding or to achieve the required gross margin increase could “cast significant doubt on the company’s ability to continue”.
However, the accounts also note the new funding would be sufficient to support the group through to at least September 2024.
Meanwhile, the company has also received £35m since late 2022 from the divestment of its snacking arm Warp Snacks into a separate Exponent-owned group.
Investment in stock is thought to be a key reason behind the cash injection, as the company has continued to see strong demand but has struggled to meet that demand due to supply chain issues.
Sources suggested the company was confident about its trading position and was in volume and value growth in key markets.
A Vibrant spokesman said: “With the tremendous support from our investors, we have built a £200m market leader in a growing category with very strong brands.
“We are excited about the new management team we have in place and the future of the business.”
However, one market observer suggested that Vibrant had suffered from the shift to private equity ownership from family run businesses and relationships with raw material suppliers in countries of origin had suffered.
Additionally, the source pointed the customer relationship impact of outsourcing logistics and the ongoing constraints of the cost of Vibrant’s debt.
“Until now the ability of Vibrant’s competitors to take market share away from them has been limited by their own capacity constraints,” the industry source commented. ”All those competitors have been investing in increased capacity since the pandemic [which will be] coming online in 2023. This means Vibrant will face much stiffer competition to retain its customers than it has in the past three years.”
Vibrant revamped its management earlier this year, with Damian Guha as CEO and Nish Kankiwala joining as non-executive chair.
Companies House filings also show the appointment of finance professionals Nicholas Pike as Michael Hall, the former a restructuring specialist and founder of Pike Restructuring. It is believed these positions are both temporary appointments as the group looks to turn around its performance.
The accounts show a drop in turnover in 2021 to £206.4m from £280.9m, though this was driven the divestment of its snacking brands and its cash and carry business.Sales from continued operations rose from £154m to £197.7m.
Vibrant Foods was created in mid 2020 through the acquisition of five Asian foods brands, TRS, East End Foods, Cofresh, Fudco and Everest Dairies, to create a global foods specialist under Exponent’s ownership.
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