Black Sheep shareholder claims Breal deal is ‘daylight robbery’

A shareholder from Black Sheep has called Breal Group’s pre-pack administration deal of the Yorkshire business “glorified daylight robbery”.

In an open letter sent to The Yorkshire Post, former shareholder of Masham’s Black Sheep Brewing Company Keith Sturdy explained that hearing the new Black Sheep would be receiving a £1 million investment was “cold comfort”.

Speaking about the situation, Sturdy said: “This is cold comfort to people like myself as one of the 1,234 shareholders in the old company who as creditors along with various other companies and the government (i.e. tax payers) are owed between £4-5m. The remaining three directors placed the company into administration without any proper consultation with the shareholders.”

As his letter explained, when the company was sold by the administrators to Breal for some £5m in May, “Breal formed a new company Black Sheep Brewing Ltd and the three remaining directors of the old company took up similar positions in the new brewing company”. But, he pointed out that “the so-called pre-pack administration deal is nothing but glorified daylight robbery.”

Breal Group swooped in to buy Black Sheep last May following news that the North Yorkshire-based brewery was entering administration due to “the pandemic and the sudden rise in all costs”.

The private equity firm, which has also bought other struggling British breweries including London-based Brew By Numbers and Brick Brewery as well as Warwickshire’s Purity Brewing Co was also rumoured to be circling to attain North Brewing when the Leeds brewer and bar operator filed a Notice of Intention to appoint an administrator despite doubling its brewing capacity in recent years. Luckily for North, the business was saved by Kirkstall founder Steve Holt, retaining its independence.

Speaking to db earlier in the month amidst claims it was planning to consolidate its brewing businesses, Breal Group assured the drinks business that it had no plans to consolidate the Purity business.

Regarding Breal’s interests in Black Sheep, Sturdy admitted in his letter that he was “glad that most of the jobs of the employees in the company were saved” despite news of redundancies and closures circulating, but queried “how the directors are fit and proper persons to run the new company”.

Describing the issue, he highlighted how “at the last AGM there were 1,234 shareholders, 56, of which including myself, held 5,001 or more shares” and added: “most of us are not rich, but are hard working loyal people, including employees of the old company, farmers, licensees and local tradesmen”.

He said: “Coincidentally the CEO owned no shares in the company at this time. The MD and export director owned 6,256 and 11,050 shares respectively” and added: “In my view these deals should be outlawed.”

Breal Group, a private limited company registered in Cavendish Square, London, comprises a number of private equity, lending and debt advisory businesses. According to the company’s website, it considers itself to be “a multi-disciplinary equity, lending and advisory services family”

Breal Group has been contacted by db over its business methods when acquiring beer businesses but the business directors have so far remained silent aside from sending out communication regarding Black Sheep’s latest charitable endeavours.