Sale of Black Sheep Brewery prevented ‘local employment catastrophe’, says CEO

The sale of Masham’s Black Sheep Brewery prevented a “local employment catastrophe”, the company’s chief executive has said.

Charlene Lyons, who has been kept on in her role following the sale of Black Sheep, warned that other breweries faced administration amid the current economic climate.

It comes as administrators Teneo Financial Advisory revealed in a report this week the company suffered significant sale losses during the covid pandemic.

The report said sales fell from a high of £19 million in 2019 to £14 million last year, which resulted in a £1.6 million loss.

It added the company’s performance “suffered during covid pandemic and trading challenges continued as a result of the current economic environment”.

Ms Lyons said the sale of the company to Black Sheep Brewing Company Ltd, which is owned by London investment firm the Breal Group, helped to save jobs.

She said:

“The Breal Group acquired the assets, out of administration, to secure the business for the long-term and this has saved the jobs and futures of the people that worked there.

“Black Sheep is a significant employer within the town of Masham, this deal has prevented what could have been a local employment catastrophe.”

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The deal saw Black Sheep sold to Breal Group for £5m on May 26.

It was part of a pre-packaged sale and the appointment of administrators, which the company said was “essentially to give protection to the companies and prevent any person taking action against it”.

It also left creditors, including HMRC and suppliers, owed nearly £3 million – money which administrators don’t expect them to get back.

But Ms Lyons said breweries across the country faced “challenging times” amid high inflation and the cost of living crisis.

She added that it was likely that more breweries would enter administration this year.

Ms Lyons said:

“We do recognise that this is a difficult time for all shareholders and stakeholders alike, while the industry continues to face challenging times. 

“In the last 12 months, 45 breweries entered insolvency in the UK, a three-fold increase on the previous year, as the cost-of-living crisis has squeezed household disposable income.

“This has had an extreme and adverse effect on all brewers’ sales, at a time when their own costs and inflation are high. Black Sheep has not been immune to these factors, leading it to the administration process. It is highly likely that many more will follow in the coming months.”

Suppliers owed £3m after Black Sheep Brewery sale

Creditors were owed nearly £3 million after the sale of Masham’s Black Sheep Brewery, administrators have revealed.

In a report, Teneo Financial Advisory said that both HMRC and unsecured creditors are not expected to receive any money back.

The news comes after Black Sheep was sold to London Investment firm Breal Capital for £5 million on May 26.

The deal was a part of a pre-packaged sale and the appointment of administrators, which the company said was “essentially to give protection to the companies and prevent any person taking action against it”.

The decision to sell the company came as Black Sheep’s sales fell from a high of £19 million in 2019 to £14 million last year, which resulted in a £1.6 million loss.

Administrators said the company’s performance “suffered during covid pandemic and trading challenges continued as a result of the current economic environment”.

Black Sheep made use of government schemes such as the Coronavirus Business Interruption Loan Scheme and Recovery Loan Scheme. It also made a business interruption insurance claim and increased supply to supermarkets and through its e-commerce platform.

But, the report added:

“However, demand did not recover to pre-covid levels and the companies also faced cost input inflation.

“As a result, the companies continued to experience cash flow difficulties.”

Creditors not expected money back

Teneo Financial Advisory was appointed to oversee the affairs of both Black Sheep Brewery and its retail arm BSB Retail Limited.

The report by Teneo shows that HMRC was owed £1.3 million in VAT, PAYE, student loan repayments and national insurance contributions.

Meanwhile, unsecured creditors, which include traders and suppliers, were owed £1.3 million.

However, administrators said neither are expected to receive any money back.

A total of 376 creditors across both businesses are listed in the report.

Among those owed money are suppliers and packaging firms, including London-based Sustain Drinks Packaging which is owed £33,888.

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Among the highest was Simpson Malt, based in Berwick-Upon-Tweed, which was owed £83,495.

Meanwhile, staff at Black Sheep, known as preferential creditors, have already been transferred over to the new company following the purchase.

The Stray Ferret has approached Black Sheep Brewery for comment on the administrator’s report.

Masham’s Black Sheep ‘trading as normal’ as administration looms

Black Sheep Brewery in Masham is “trading as normal” after announcing it intended to appoint administrators.

The company announced the move, which it said was done to “protect the interests of creditors”, yesterday.

The brewery had launched a strategic review to explore funding options to develop the business, but last Friday confirmed it was no longer considering the sale of the company and then said yesterday it planned to appoint administrators.

The Stray Ferret asked the firm whether the move to give notice on appointing administrators affected jobs or trade at the company.

A spokesperson said that the “business continued to trade as normal” and that staff were being paid.

The firm added “no shares will be traded on asset match until further notice” as a result of the decision.

According to its most recent accounts, Black Sheep reported turnover of £14.3 million as of 31 March, 2022.

However, it also recorded a pre-tax loss of £1.18 million compared to £862,871 profit in the previous year.

‘Gloom’ descends on Masham

The move to appoint administrators was met with concern in Masham, where Black Sheep and Theakston breweries dominate the town.

Ian Johnson, a parish councillor in Masham, told the Stray Ferret that the news was a “difficult situation” which had caused “a bit of gloom”.

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However, he remained hopeful the brewery could turn its fortunes around.

He said:

“Masham is a brewery town. It’s a brewery town full stop.

“I hope there is still a future. We all do. I am sure someone would want the brand.”

In a post on its social media this afternoon, Black Sheep said it had received “supportive messages” since making the announcement.

Thanks for all the supportive messages since our announcement, BUT we've not gone anywhere!

We've just had 22 tonnes of malt delivered and are busily making more beer and can supply everyone as normal. So, if you’d like to help us, get out to your local and sup some Black Sheep! pic.twitter.com/CYHVR8EyIG

— Black Sheep Brewery (@BlackSheepBeer) May 3, 2023

It added:

“We’ve just had 22 tonnes of malt delivered and are busily making more beer and can supply everyone as normal.

“So, if you’d like to help us, get out to your local and sup some Black Sheep.”

Black Sheep, which was founded in 1992 by Paul Theakston, appointed Teneo as its financial advisor to support its funding review in April.

At the time, the company said it was experiencing good sales volumes of its beers, however there remained a significant constraint on funding due to economic conditions.

Masham’s Black Sheep Brewery to enter administration

Masham’s Black Sheep Brewery has announced it is to appoint administrators.

Last month, the company, which employs about 50 staff, launched a strategic review to explore funding options to develop the business. One option was to sell the company.

However, the firm announced in a trading update on Friday it was “no longer considering the sale of the company”.

Today, in a further statement, the company has announced it is set to appoint administrators.

It said:

“On 11 April 2023, the company announced it had commenced a review of its strategic options, including the possibility of an acquisition of the company in all or in part, given constraints on its funding. On 27 April 2023, the company made a further announcement explaining that it was no longer seeking an acquisition of the entire issued share capital of the company, but it was still considering a sale of the business and assets of the company.

“The board of the company has resolved to file a notice of intention to appoint Kristian Shuttleworth and Clare Boardman of Teneo Financial Advisory Limited as administrators to the company and BSB Retail Limited.”

Black Sheep, which was founded in 1992 by Paul Theakston, said it had made the decision to “protect the interests of its creditors”.

It added that “no shares will be traded on asset match until further notice” as a result of the move.

It comes as the company appointed Teneo as its financial adviser to support its review in April.

At the time, Black Sheep said it was experiencing good sales volumes of its beers, however there remains a significant constraint on funding due to economic conditions.

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