The management team at a Lanarkshire-based food ingredients firm has bought the business from its parent company in a £4 million deal.
Carluke-headquartered R&W Scott, which manufactures products including jams, has been sold to managing director John Easton and fellow directors Stephen Currie and Michael Hewitt by the Real Good Food (RGF) company as part of a disposal programme to cut its debts.
R&W Scott, which employs 94 people, has been producing jams and preserves for some 130 years and also manufactures chocolate flavoured coatings and icings for retail, foodservice and wholesale customers worldwide.
Under the management buyout (MBO) deal, a cash payment of £1.5m is being made to RGF, £500,000 of which is deferred until 30 September 2019, and R&W Scott’s management team is taking on £2.45m of debt.
Funding for the deal has been provided by Bibby Financial Services through asset-based finance and invoice discounting facilities, with further equity investment primarily coming from the management team. In RGF’s last financial year, R&W Scott contributed £10.36m of revenue, and incurred losses before tax and one-off items of £1.22m.
Easton, who has worked in the business for 12 years, said the new ownership team was “committed to growing the business further and cementing our position within the industry”.
“For employees and customers it’s very much business as usual in the short term, however, we do have several exciting innovative new products planned for the future,” he said.
“RGF has been a supportive owner over the years, however this management buyout provides a strong platform from which we can really accelerate our growth plans and thrive as an autonomous business.”
The disposal announcement came as quoted RGF announced losses before tax in the first half of the year rose to £9.1m from £3.4m due mainly to writedown of the value of its cake decoration business. Revenue from continuing operations fell to £30.4m from £31.9m.
RGF chief executive Hugh Cawley said 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”.
He said the latest disposal for the group, which follows the sale of its Haydens Bakery arm for £12m in September, marked a significant milestone in its turnaround and improvement programme.
“We are now able to focus on the core continuing businesses with no bank term loan and a fully funded growth plan. Overall, through the actions of the last 12 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.”
Michael Currie, partner at Aberdein Considine who provided legal advice to the MBO team, said: “The management team at R&W Scott have demonstrated great ambition and vision in leading the firm to this point, and it was a pleasure in supporting the next stage of their development.”