'Multiple parties interested' in Black Sheep Brewery following notice of administration announcement

A potential sale now could allow for the company to be structured differently to a PLC in future if new owners wish.

A source told The Yorkshire Post that there are already around “five to 10” parties who have made serious inquiries about the business and its assets.

"There are several interested parties already and today [Wednesday] a couple more have come forward to say we are interested in this, that or the other,” they said.

"Various different interested parties have different requirements. The key things people are most interested in is the brand, the distribution, the ability to trade way beyond its size and scale, the business’s incredible story and having amazing people.”

When the intention to appoint administrators was announced on Tuesday, CEO Charlene Lyons said the company had been hit by the “perfect storm” of the pandemic followed by inflation.

She told BBC Radio 5 Live on Wednesday that she is confident the business still has a viable future.

"The notice to appoint administrators is the right approach for where we currently sit as we are trying to progress with any form of sale,” she said.

When asked whether there was a possibility the 50 people who work for Black Sheep could lose their jobs, she said: “There is always a possibility but we are working hard to progress with the sale we are trying to finalise and close.

"We’ve got a lot of interest as a really strong brand. The world is better for having Black Sheep in it and everyone sees that.

"We are really hopeful that our successful result will include continued trade for the business as Black Sheep.”

The company, which was founded in 1992 by Paul Theakston, also runs pubs in Leeds and York.

The company’s last accounts for the year ending March 2022 recorded a £900,000 loss.

In August 2020, it took out a £3.125m Coronavirus Business Interruption Loan Scheme and in July 2022, took out a further £1.6m from the Recovery Loan Scheme initiative. Both are in the process of being repaid over several years.

Ms Lyons told the BBC: “We’ve got a lot of debt in the business. When Covid happened, we took on a lot of debt, we took advantage of the CBILS loan and the RLS loan. £4m needs repaying. That’s very difficult when sales perhaps in some cases haven’t recovered since Covid, costs have increased quite significantly across the board and we haven’t had the available cash to do the things we really want to do with our customers which will then in turn grow sales.

"Our balance sheet isn’t particularly healthy but with a bit of a rebase and a restructure we can get to that place.”

When asked whether discussions were taking place with suppliers owed money about restructuring payments, she said: “There’s always discussions with suppliers and we continue to work really hard with our suppliers. We’ve worked with the majority of core suppliers for 30 years. As with all of these things, it is really important you work collaboratively together.”

The company had been attempting to raise equity but when that did not succeed, a strategic review commenced on April 11. The options at that stage included the potential sale of all or part of the company.

Last Thursday, Black Sheep announced it was no longer seeking the acquisition of its entire issued share capital but was still considering an overall sale of the business and assets.

The source told The Yorkshire Post that the sale process should hopefully allow the company to access cash for working capital to allow investment in the growth of the business.

Ms Lyons told the BBC: “The core fundamental basics of our business are not broken. We’ve just got a situation where there is an awful lot of Covid-related debt plus a perfect storm of all the other things everyone has been facing, but probably more so in the hospitality sector – cost of living crisis, high inflation, fuel and energy, cost of materials going up, etc.

"All of that coupled together creates a scenario which makes some businesses struggle, which is kind of where we sit.

“With a restructured financial model, you are able to do different things with your money."

She said all efforts will be made to protect the jobs of workers.

"Masham is a very small market town and we employ a lot of people that live in the surrounding areas and we need to make sure they are protected and their employment isn’t affected by this process.

"It is just hopefully a few steps further to the completion of an exciting deal. Hopefully we should end the week in a more positive way than the week was started.”