(Montreal) Investissement Québec will replenish the coffers of Goodfood Market by investing 10 million in the ready-to-prepare meal specialist.
The intervention of the financial arm of the Quebec government comes at a time when the finances of the Montreal company are under pressure before the achievement of the profitability that management anticipates imminent.
The debt securities acquired by Investissement Québec will have an annual interest rate of 12.5%, the company and the institution announced on Monday.
A group of investors including officers, directors and shareholders will provide additional capital of 2.675 million in the same debt securities.
The capital injection will “strengthen” the company’s balance sheet, said Goodfood chief executive Jonathan Ferrari. leader in a statement.
In January, Mr Ferrari reiterated his goal of generating adjusted earnings before interest, tax and amortization (EBITDA) in the current quarter. He hadn’t given a specific timeline for when Goodfood might generate excess cash, but it should come shortly after achieving positive EBITDA, he said.
Before the announcement, analyst Frédéric Tremblay of Desjardins Capital Markets believed that Goodfood would need new funds before being able to finance itself from the cash generated by its activities. “I believe it would be prudent to consider an injection of cash in 2023 so that the company is in a better position to finance its growth in the ready-to-prepare meal industry, a billion-plus market. »
With rising interest rates, several technology companies have been forced to revise their strategy while creditors and shareholders have become less patient with growing companies that are not yet profitable.
“It changed the way we think about our investment timelines,” Mr. Ferrari said in January. Rather than making investments that were going to pay off in five years, we are now aiming for six or twelve months, maximum. »
Against this backdrop, Goodfood announced last October that it was abandoning plans to break into the online grocery market to focus on weekly meal plans where it believes it can achieve profitable growth faster.
Companies in this story: (TSX: FOOD)