Signature Brewery has split its company in two in a bid to settle legacy Covid debt with HMRC and its landlord.
The Walthamstow-based craft brewer, which has raised over £1.3m from a combination of crowdfunding and private investors since 2018, is to separate its brewing business from its retail and hospitality operations.
As part of the move, a new limited company – called Signature Brew Group Limited – has been created, with its shareholder structure mirroring that of Signature Brew Limited. Any investors who previously put money into Signature Brew Limited will have that investment reflected in the newco.
Meanwhile Signature Brew Limited has entered into a CVA and will look to pay off debts amounting to around £1.3m over the next five years.
The move has the backing of Signature Brew’s major shareholders, who have committed fresh investment to enable the brewing business to move forward debt-free, according to the brewery’s founders.
Debt obligations
Despite a challenging trading environment and significant arrears, Signature Brewing remained a profitable business with positive EBITDA and revenue up 18% year on year, the claimed. However, growth had been hamstrung by having to commit a significant proportion of its free cashflow each month to pay off its debt, they said.
“This restructure allows us to finally put the challenges of the past behind us and focus on building the future we know Signature Brew is capable of,” said Signature Brew co-founder Tom Bott. “We’ve built a business that’s profitable, resilient and unique, blending great beer with incredible live music experiences.
“By addressing legacy debt in a controlled way, we’re protecting all jobs, strengthening relationships with our partners and creating a business that’s set up to grow.”
During Covid, like many other small breweries Signature Brew saw a drastic reduction in trade and accrued significant debts to HMRC and its landlord. Both agreed to Signature suspending payments during this time.
The brewery entered into a ‘time to pay’ agreement with HMRC in autumn 2023, with a downpayment agreed in the region of £70k.
However, afterwards HMRC revised its view and demanded a £310k downpayment, which forced the brewery to return to its investors to be able to continue trading.
Despite the setback, Signature Brew managed to clear a significant portion of its debt in 2024. It returned to HMRC to renegotiate the terms, but was unsuccessful.
Therefore, the company’s founders decided – in conjunction with major shareholders – to undertake the restructure in order to enable fresh investment in its brewing business in pursuit of growth.
“We’ve worked hard to mitigate the impact of this process on our suppliers and brewing industry partners, ensuring we come through this with our key relationships intact,” Bott said. “Most importantly, this gives us the headroom to invest, innovate and continue doing what we love, at a bigger scale.”
Muntons, which supplies Signature Brew with malt for use in its brews, gave its backing to the restructure.
“We’ve had the pleasure of supplying malt to Signature Brew for the past eight years, and watching their growth has been fantastic,” said head of brewing malt sales Joe Fifield. “Through all the ups and downs, the team has never lost sight of their vision. We’re proud to be part of their journey, and with this new chapter ahead, we’re looking forward to supporting Signature Brew for the next eight years and beyond.”
No comments yet