The Very Good Food Company has failed in a bid to secure new funds as an existing creditor calls in a loan claiming a default by the plant-based protein business.
The future of the Canada-based firm now looks bleak after The Very Good Food Company had repeated a warning in November that it needed additional financing to ensure the survival of the company. Amid the turmoil that has hung over The Very Good Butchers brand owner since last Easter, two directors have also resigned, leaving the board with one executive.
Toronto-based creditor Waygar Capital has called in a CAD8.1m (US$6m) loan, including principal and interest, in addition to accruing interest and “recovery costs”, according to a statement from The Very Good Food Company.
“Waygar has alleged that certain events of default have occurred”, the Vancouver-based company said, including breaching a cash-reserve requirement and exceeding a so-called ‘borrowing base’, where assets are pledged as collateral for a loan.
The lender has “reserved its rights” to apply for the appointment of a receiver to recover the funds within a ten-day window from 6 January.
Just before Christmas, The Very Good Food Company said it had entered a non-binding agreement with private-equity firm Reef Capital for CAD2.1m via unsecured convertible notes at an annual interest rate of 15%.
However, in a statement issued yesterday (11 January), the company said it “was not able to close the proposed transaction” and added: “As previously disclosed, without securing alternative financing by December 31, 2022, the company would not be able to continue as a going concern.”
Directors quit
It has been a chequered nine months or so for The Very Good Food Company following the departure of its founders last year amid a cash-burn warning, the appointment of a new executive management team and the disposal of assets to keep the business afloat. A strategic review was launched in September, a process that is still ongoing and could entail an acquisition or merger, the company said at the time.
The only director remaining on The Very Good Food Company’s board is newly-appointed CEO Parimal Rana, who signed off yesterday’s statement with the announcement that Dela Salem and Justin Steinbach resigned as of 5 January. As a consequence, trading in The Very Good Food Company’s shares has been halted on the Toronto Stock Exchange.
In another blow to The Very Good Cheese Co. brand owner, the Nasdaq exchange in the US issued another delisting warning on 5 January because the company failed to hold an annual general meeting (AGM) within 12 months of its last financial results on 31 December 2021.
Last November, the business said it planned to appeal a delisting notice from the same stock exchange after again violating listing rules pertaining to the share price.
A hearing was held with Nasdaq on 15 December.
The exchange concluded this month that to retain a listing, The Very Good Food Company will have to gain shareholder approval for a so-called reverse stock split, essentially reducing the number of shares through consolidation at a higher price. That is an exercise usually employed by companies in distress to retain a stock-market listing.
Nasdaq has stated that by 17 April, the share price will need to have traded at or above one Canadian dollar for 20 consecutive trading days.
The next AGM will be held on 27 February, The Very Good Food Company said yesterday, when presumably the future of the business will be the subject of debate.
