Black Sheep Brewery would have shut without controversial £5m sale, new boss says

Black Sheep Brewery would have shut down if a controversial sale of the business which left shareholders empty-handed and is due to cost creditors and taxpayers millions had not gone through, the firm’s new boss has told The Yorkshire Post.

Mark Williams, CEO of Keystone Brewing Group, said that while he was "sympathetic" to shareholders and creditors who have lost money as a result of the pre-pack administration deal which took the Masham brewery into private ownership last year, it was the only option on the table to save the business.

“At the time the only other outcome was closure, there was no one else,” he said.

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Black Sheep Brewery is under new ownershipBlack Sheep Brewery is under new ownership
Black Sheep Brewery is under new ownership

The firm had more than 1,000 shareholders at the time of administration and there has been criticism from some at the failure to ask them for funding to support the business prior to the administration deal being done with a £5m sale to London-based investment firm Breal Group.

Breal has subsequently bought several other breweries and created a group called Keystone headed by Mr Williams to oversee them all, with further buyouts planned as part of ambitions to become one of the top ten brewery groups by size in the country by 2028.

Mr Williams said more shareholder support for Black Sheep would not have changed the business's underlying challenges or succeeded in the long run.

“If they had gone to shareholders for a request, more people might have ended up losing even more money. Just because you give a business money doesn't make it profitable and cash generative. If Sheep had asked for more, they probably wouldn’t have been able to ask for enough."

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The firm had recorded a £1.6m loss in 2022-23 as it struggled with the fallout from the pandemic and rising costs.

Three of the four pubs that Black Sheep ran in Yorkshire were closed following the deal, while taxpayers and creditors are expected to lose out on around £4m as a result of the administration process. A further report from administrators is due to be published in June.

The company had taken out two Government-backed Covid loans, with the first in 2020 and the second in 2022.

Mr Williams said rising interest rates on the loans combined with increased energy costs and the price of grain linked to the war in Ukraine hampered the business, along with its main export market prior to the war being Russia.

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He said the previous management team led by then-CEO Charlene Lyons had “tried their absolute level best to save the business” before administrators were called in.

Keystone is investing around £1m in Black Sheep’s facilities in Masham, including a new tank farm and brewhouse as well as upgrading its packaging facilities.

Mr Williams added: “We love Black Sheep. It has a very bright future. We are not going to compromise on the taste or the quality. This business is in a far better position today than it has been for the last two or three years.”

He said the business is still currently loss-making but believes it can return to profit in the next financial year.

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