The curse of DeListing strikes again. Isnt it time we all learnt the very obvious lesson?
Righteous have often been held up by Crowdcube, where they raised all of their finance, as a shining example of a great funding success.
Now in a letter to shareholders, Gem has offered to buy back their shares after the company's salad dressings have been delisted by many of their main clients. It now appears, according to the email, that salad dressings are not the guaranteed success story that was sold by Crowdcube to its investors - or at least not in this country. It's not clear what has changed - maybe the whole thing was made up from the start?
Righteous is a classic example of how not to do things. There is no doubt that they work very hard, but their business judgements have now been proven to be very poor. A deal recently struck in the US has been a disaster, their own words, and the company appears to be being prepared for mothballing. They cant say what they can pay shareholders for their shares - but acknowledge that they are strapped for cash - so not much.
Investors might feel slightly misled. In one of the early raises they carried out on Crowdcube, they had a contract with a US distributor as a mainstay of the offer. Not long after promising the earth, it turned out the first shipment had not sold well so the contract was cancelled.
Then Gem discovered cauliflower - creating Cauli Rice as a separate company and using Crowdcube to raise money for it. Despite some serious problems with a failure of the their product using winter cauliflowers, this business appears to be going quite well. But then, we all thought that about Righteous - right? Did investors in Righteous really sign up to a deal where the two founders walk of into the sunset through a field of cauliflowers - somehow we doubt it. It will be interesting to see what they offer to pay back - maybe a share deal with Cauli would be a better option?
So the obvious lesson, in case you are a little slow, is that you cannot believe what they tell you and if the listings are mainly with the big boys, they cannot be relied upon. Do you think anyone would have invested in Righteous had they known what Gem has just told them -
Because salad dressings is a shrinking category, supermarket buyers are giving it less space and cutting down the brands in the range - and sadly Righteous has been part of that cull
- that it turns out salad dressings are not an important market in the UK after all?