Real Good Food announced today it agreed to sell Garretts Ingredients to Kent Foods for around approximately £1.8m (€2.08m) payable in cash, on a debt free/cash free basis.
Funds from the sale, which should be finalised by 20 April, will be used to reduce Real Good Food's debt.
Real Good Food covers a number of market sectors including retail, manufacturing, wholesale, foodservice and export.
Its main business units are cake decoration, specialty food ingredients and premium bakery and its brands include Renshaw, Rainbow Dust Colours brands, Garrett Ingredients, R&W Scott, Brighter Foods, Haydens and Chantilly Patisserie.
The company’s chief executive, Hugh Cawley, said: "We are pleased to have agreed the sale of this small, non-core business as part of our plan to improve the Group's performance."
A statement by the company said: “The Board believes that the business has more in common with Kent whose skills and aptitude are better suited to managing its contracts, given Real Good Food's resources are being increasingly focused on serving the end consumer.”
Garretts supplies dairy, sugar and other food ingredients to UK food companies, including larger manufacturers and SMEs.
In the financial year ending March 2017, Garretts contributed £21.3m (€24.6m) of revenues and reported an operating loss of £0.9m (€1.04m).
The unit had had net assets of £1.9m for the same year and Real Good Food said it expected to report a modest loss on the disposal.