Art Green's Riot Foods needs $1 million or may be sold

Riot Foods owners Art Green. Photo / Supplied

Art Green and Ryan Kamins' company Riot Foods - which owns CleanPaleo and other brands - needs to raise $1 million in just two weeks or the business may be put up for sale, a letter to shareholders reveals.

Kamins, who is the business' chief executive, said in the letter that Riot Foods had faced "significant challenges" with its Ascot Road factory after the alleged destruction of the facility by an unnamed "fumigation/sterilisation company" and so had missed its production date.

"Essentially a company came in to make final preparations to open the facility, that's where we will be making our dried beef product, and something happened in that process, and effectively all of our brand new production equipment was destroyed as well as a lot of damage to the flooring," he told the Herald.

Kamins said Riot Foods had to rebuild the production facility, one of two it has in Auckland. He would not disclose how much the company spent on the rebuild.

"This has significantly impacted the cash flow and profitability of Riot Foods. The inability to produce at this site, and the significant management focus on the recovery has impacted on our sales and related profitability," Kamins told shareholders.

"Although we have been working closely with several shareholders to help fund the business through this challenging time, Riot now finds itself in a tough position to turn things around with the Christmas/New Year period approaching."

Issues with the factory had delayed its re-launch of its biltong and other Clean Paleo product ranges, along with its nut butter brand Poppy and Olive and Better Balls, into the Australian and Asian markets.

Riot Foods was founded in 2014 by Kamins and Green, a year after setting up flagship food brand Clean Paleo. It has since acquired other food brands, including Poppy and Olive, in April 2017.

Green, a shareholder who appears in the business' adverts, is a former reality TV star who appeared in the first local season of The Bachelor NZ, a show where New Zealand women vied for his affection.

Kamins told the Herald today that he was devastated by the situation the business was in: "We put a lot of work and money into it, it's disappointing."

Riot Foods is now attempting to secure funding, a total of $1 million. It needs at least $900,000 within 7 to 14 days, or by October 13, according to the letter.

"Moving to profitability is simply not possible for us to do unless we are able to raise +$900k over the next couple of months, so that we can spend approximately half of that ($450k) implementing machinery to significantly reduce our labour expenditure and other systems to drive higher margin sales channels," he said.

We're in discussions with parties around various options and we're going to do whatever is best for our stakeholders.

"Matters outside our control have lead us to this position, and whilst disappointed we continue to focus on getting the best outcome for all of our stakeholders."

Riot Foods has 159 shareholders and Kamins said he had received verbal commitments from several existing shareholders about financially backing the company.

"We're in discussions with parties around various options and we're going to do whatever is best for our stakeholders," Kamins said.

In December last year Riot Foods crowdfunded $1 million to kit out its second factory, located at Auckland Airport, with machinery.

The company last year signed a contract with supermarket chain Coles to distribute its biltong range to supermarkets throughout Australia. Its ranges are also supplied to 250 supermarkets in New Zealand.