‘Chicken King’ seeks £50m in funding amid supply chain crisis
Written by Hit Music Radio News on 12/11/2021
Britain’s biggest poultry supplier is in talks to access tens of millions of pounds in additional funding as it grapples with headwinds caused by labour shortages and the supply chain crisis.
Sky News has learnt that Boparan Holdings, which trades as 2 Sisters Food Group (2SFG) and is headed by the ‘chicken king’ Ranjit Boparan, is in advanced negotiations with several hedge funds about providing around £50m of extra liquidity to the company.
The efforts to secure new funding underline the squeeze that has been exerted on food producers amid the toxic cocktail of labour and raw material shortages, and accelerating inflation, which has been blighting major economies in recent months.
Sources close to the talks said on Friday that the talks with financiers were expected to result in a deal in the coming days.
The identities of the new funding providers is unclear, but is expected to provide additional support to 2SFG’s trading during the crucial Christmas period.
As the owner of Bernard Matthews, Mr Boparan is Britain’s biggest supplier of Christmas turkeys to supermarkets across the country, while his group also owns a number of other major food brands, such as Holland’s Pies.
Its customers include Marks & Spencer, J Sainsbury and Tesco.
Last month, Mr Boparan warned that an era of cheap food production was coming to an end, and said rising inflation was “decaying the food sector’s supply chain”.
“The days when you could feed a family of four with a £3 chicken are coming to an end. We need transparent, honest pricing. This is a reset and we need to spell out what this will mean,” he said.
“Food is too cheap, there’s no point avoiding the issue. In relative terms, a chicken today is cheaper to buy than it was 20 years ago.”
2SFG employs about 18,000 people in the UK, making it one of the country’s biggest privately owned companies.
In 2017, the company was hit by a food hygiene scandal, when a Guardian and ITV undercover investigation revealed a host of failures to adhere to industry standards.
The crisis triggered an appearance by Mr Boparan in front of a parliamentary select committee, with MPs reporting that the company’s “past record…[was] far from pristine”.
Since then, it has bolstered its corporate governance, recruiting the former Morrison’s and Co-op executive Richard Pennycook as non-executive chairman.
2SFG’s third-quarter results, issued to debt investors in June, highlighted the scale of the challenges facing the company.
In the third quarter of its financial year, like-for-like margins in its UK poultry business declined by 100 basis points, with overall earnings before interest, tax, depreciation and amortisation sliding by nearly a third to £22.2m.
It said that challenges in the availability of labour in many UK poultry factories would have a significant impact on its fourth-quarter numbers, which are due to be issued in the next few weeks.
Mr Boparan has also become one of the UK’s most prolific restaurateurs, acquiring chains including Carluccio’s and Giraffe.
Bankers at Rothschild are advising 2SFG on the talks about securing additional funding.
A spokesman for 2SFG declined to comment on Friday.
© Sky News 2020