By JOHN ROBERTSON
THE SPIRITS company Blackwood is being relaunched as a new outfit called Catfirth Limited in a bid to keep the Shetland whisky distillery plan alive.
According to documents seen by The Shetland Times, action by the Bank of Scotland to recover debts has effectively pushed three Blackwood companies out of business. The parent company, Blackwood Distillers, is about to be placed in liquidation and wound up, a process expected to start within days.
In its place Catfirth Limited has been set up to salvage the plan for a distillery in Nesting, hatched eight years ago. Blackwood shareholders are being asked to transfer their entitlements to Catfirth Ltd, through the offices of the new company’s financial advisers City & Merchant of Throgmorton Street, London.
Catfirth has already raised another £50,000 from existing shareholders to buy the distillery site back from the bank. Once former Blackwood shareholders have exercised their right to transfer and buy more shares, the company will turn to wealthy new private investors to try to boost its funds to £500,000.
The kind of investors to be sought are known as a high net worth and sophisticated investors, which is people earning over £100,000 a year or who have assets over £250,000 and investors who have experience and understand the risk of losing their money.
In a letter, the two directors of Catfirth, Tim Lyle of City & Merchant and long-term Blackwood shareholder Andy Burrows, inform Blackwood shareholders that the new company will take over the existing Shetland whisky project and start trading whisky to provide income.
It will buy the existing barrels of so-called Muckle Flugga whisky at £1,000 a barrel from Blackwood founder and managing director Caroline Whitfield. The liquor will be sold and more acquired, matured and sold to earn funds. Catfirth will be run as a “virtual” company with no staff, administered by City & Merchant.
In a letter accompanying the Catfirth offer, Ms Whitfield reveals the extent to which the bank has harried her over the money it is owed by her three companies, making her the personal guarantor for the debt.
Blackwood Distillers and Blackwood Holdings still owe £90,000 between them. She has effectively been sidelined from the Catfirth project at this stage and is acting as a consultant to the company with the option of buying a stake at a later date, if the shareholders agree.
Explaining the demise of Blackwood, she told shareholders no new investor would put money in now because it would simply be taken by the bank. An attempt made in January to raise £500,000 only attracted one-tenth of that figure. Blackwood was then forced by the bank to seek a licensing deal to cut its overdraft, signing up with Blavod Extreme Spirits in what Ms Whitfield reveals was not as good a deal as had been hoped for. The bank and one of its trade creditors then pushed the Shetland Spirit Company into administration.
Mrs Whitfield told shareholders: “Much has been written about the ‘credit crunch’ and the capital adequacy problems of the banks and there has been much in the media about Bank of Scotland. Blackwood has been caught up in this financial turmoil.”
Yesterday she said the financial troubles and the actions of the bank had been a “pretty harrowing” experience for her but there was now a much more viable plan for pushing the whisky plans forward.
“It’s a way to take it forward with some new energy and some new money. I think the fact that existing shareholders are pledging to put funds in to carry the thing forward in a situation where most people can barely raise a dime is pretty good. It shows a lot of underlying commitment and drive to make the project work.”
The project to set up a “prestigious” whisky distillery in Shetland to rival Orkney’s 200-year-old Highland Park began back in 2002.
The former air force base at Catfirth was chosen as the site for the distillery later that year and 500 of the 2,500 bonds in the new company were set aside for Shetland residents, also entitling them to two cases of the unique Muckle Flugga whisky when it matured, though it is thought that only a handful of islanders took up the offer.
Blackwood Distillers officially launched a range of white spirits, including Nordic Dry Gin, Premium Nordic Vodka and Jago’s vanilla vodka cream liqueur, in 2004 and the products have proved popular, winning a gong at the Drinks Business Awards the following year.
But the company has come under criticism locally, including in letters to this newspaper, for marketing its spirits as indigenous Shetland produce when none are actually produced within the isles. The company claims to use water from a spring in Weisdale and Shetland cream as one of its ingredients in Jago’s. Much marketing mileage has been made out of the sourcing of plants from far-flung parts of Shetland, including wild water mint, sea pinks and angelica.
There has also been some frustration for locals who chose to invest in the company at their continued failure to bring forward any concrete plans for the proposed distillery and in recent years Blackwood has run into financial problems.
Following the economic downturn in Unst, precipitated by the closure of the RAF Saxa Vord base, the company briefly considered building the distillery in the north isle but that plan was later abandoned because the company could not reach agreement with the camp’s owners. Having already invested half a million pounds on acquiring the Catfirth site and getting to the stage of planning consent, Blackwood founder and managing director Caroline Whitfield said it would be commercially unviable to operate from the Unst site.
Further uncertainty cropped up last September when Ms Whitfield admitted that the distillery plan had been delayed because of personal circumstances regarding her divorce. It also emerged that auditor BDO Stoy Hayward was unhappy with the financial position of the company, which incurred a net loss of £2.4m in 2005/6.
Several directors have resigned from the company in the last 12 months.
Despite its financial woes, Ms Whitfield has publicly insisted that Blackwood remained committed to ensuring the business it began in Shetland will flourish in the long term.