Riot Food’s Ascot Road factory has climbed back from the brink of destruction.
The paleo food company, which owns the CleanPaleo brand, announced last week it was seeking around $1 million in emergency funding from shareholders after “significant challenges” occurred in their Ascot Rd production factory. The facility was destroyed by an unnamed fumigation company a week before production was due to commence, dramatically affecting cash flow.
The fumigation company was apparently well respected, and had previously worked for major New Zealand manufacturers. Something in the process went wrong, resulting in mass amounts of rust.
“There was water everywhere and rust pretty much covering every piece of stainless steel in our plant,” said director and co-founder Ryan Kamins. “For some reason the gas had turned corrosive. Every single keyhole, every screw, every rivet had rust on it.”
Although the factory was insured, the insurance company hasn’t been forthcoming. An initial assessment stated the damage would be paid for by Riot Foods insurance, the fumigator’s insurance, or the fumigator themselves. They were told the money should come through in the following days – it still hasn’t.
“We’re still debating with them, and we’ve made a claim against the third party and their insurers as well. We’re still yet to find out three months later whether they’re accepting liability for what happened,” explained Kamins.
With the holiday season approaching, and the launch of several products into the Australian and Asian markets, the destruction has come at a bad time. August was the brand’s worst-performing month so far, which worried investors; but September was a real turnaround. Investors were aware there would be further crowdfunding this year, and due to the accident it was brought forward by a month.
“The company is currently solvent and has a strong balance sheet,” read a recent letter to shareholders from Kamins. “September (last month) was the best financial result that Riot Foods has had in over a year.”
The Ascot Road factory has been rebuilt, and is waiting for sign-off by MPI – then it will be back in action. Both Kamins and fellow co-founder Art Green feel the media played a harmful role in the company’s attempts to solve the problem. “What’s happened in the media has put New Zealand small business at risk, it’s put the crowdfunding industry at risk, and it’s insulted both my potential shareholders and existing ones,” said Kamins.
The plan going forward is to hold another equity crowd raise as soon as possible. Kamins feels positive they’ll receive the support needed.
