Cains for sale as rescue talks fail

Aug 8 2008 Alex Turner

LIVERPOOL brewer Cains was put up for sale yesterday after its owners were forced to admit defeat and call in administrators.

Brothers Sudarghara and Ajmail Dusanj had run the historic Liverpool operation since 2002, but had to relinquish control yesterday afternoon after critical talks with the Bank of Scotland collapsed.

The administrators said they had already received expressions of interest for the company, which employs 1,000 people, mostly in the North West.

The group’s 109 pubs were continuing to trade and there were no immediate redundancies as the administrators worked to sell the business as a going concern.

Cains, which is listed on the Alternative Investment Market, suspended its shares last Friday after the Bank of Scotland decided not to support its funding needs.

Four days earlier, the Toxteth- based company had announced six- month losses to April 28 of £4.6m, and it is believed there has been no significant improvement in performance in the three months since.

The firm had been trying to re- finance for four months, a process which became more urgent when an unpaid tax bill caused HM Revenue & Customs to issue a winding- up petition at the High Court. The hearing was scheduled for Tuesday, but will now not take place.

Talks to save the company had been taking place but they failed yesterday.

Cains chief executive Sudarghara Dusanj said: “There was dialogue going on with the bank which has now collapsed. The bank has said no to our plans and the business will be put up for sale.”

He refused to comment on whether he would be looking to buy the company back from the administrators. Instead, he was focused on the future for the 100 staff at Cains’ Stanhope Street brewery, and the 900 staff employed across the pubs division.

“We just hope that employment continues at the site and the brand flourishes, that’s what we’ve always wanted,” he added.

It is likely the Dusanj family, who have directors’ loans of £2.56m in Cains Beer Company, would need substantial financial support to mount a bid for the brewer. Their now-loose grip on the company has been further weakened by news that there have already been expressions of interest.

The administrators, David Chubb, Ian Green and Craig Livesey of Price- waterhouseCoopers, will consider splitting the business and selling its brewery and retail divisions separately. Mr Livesey said: “It is currently our intention to continue to trade both the brewery and pub chain businesses, and we will seek to achieve going concern sales over the coming weeks and months.

“We have already received some early indications of interest, and we would also invite any parties interested in acquiring the brewery or pub chain businesses to contact us as soon as possible.”

Cains, which was founded by Robert Cain in Liverpool in 1850, has had a chequered history in recent times and is looking for its sixth owner in just 23 years.

The Dusanj brothers had seemed to be on the cusp of creating a stable, profitable brewery after six years’ work on its turnaround.

Production increased from 24 hours a week to 120 hours a week under their management, after attracting major contracts to produce own label beers for the supermarket sector, and recently the brewery was operating at capacity.

But, in May, 2007, they had acquired pub chain Honeycombe Leisure in a reverse takeover, as they sought to develop a brewing and retail firm which they believed would provide a robust model in the style of Manchester breweries such as Thwaites and Robinsons.

The deal involved Cains taking on £40m of debt, of which £35m remains on the firm’s books, and it was paying £200,000-a-month to service the debt.

Pub sales fell 15% during the half-year to April as the industry has been hit by declining consumer confidence, the effect of the smoking ban and rising costs. But Mr Dusanj refused to dwell on the effects of the acquisition.

“It’s very difficult to keep looking back,” he said. “The model we put together is a robust model, it’s just the timing was not right.

“We need to look forward on what we have built in that last six years. As CAMRA said, Cains has put Liverpool on the map.”

Cains workers last night expressed concerns at the news of the administration.

Rob, from Heswall, who has worked for the company for five years, said: “It’s not a nice situation to be in, we’ve no idea what’s happening, it’s very worrying”.

Another worker, who asked not to be named, said: “We’re very worried, we don’t really know what’s going to happen next.

“The administrators came in this morning and told us the situation. It’s the not knowing that’s the worst thing about it”.