Merrydown back from the brink with pounds 7m rescue plan
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Your support makes all the difference.MERRYDOWN, the beleaguered cider maker, has pulled itself back from the brink of bankruptcy by announcing an emergency pounds 7m fund-raising, a radical restructuring and the appointment of a new chief executive.
Merrydown is sacking 50 of its 125 workforce and closing down its bottling business in an effort to slash costs. The group now plans to just concentrate on its Merrydown cider brand and Schloer, the fruit soft drink. To that end its has entered into a distribution deal with Shepherd Neame, Britain's oldest brewer, and a sales agreement with SHS, a private food and drinks group.
Nick Freer, the former head of Symonds, a subsidiary of HP Bulmer, has been appointed the new chief executive of the group. He will receive share options worth pounds 270,000 on top of his salary of pounds 120,000.
Until yesterday Merrydown looked as though it was on its last legs after suffering one disaster after another. Battered by the fall in sales of its lemonade alcopop, Two Dogs, the group entered into takeover talks late last year only to be snubbed by potential buyers.
Since then the group's financial situation has gone from bad to worse.
Mr Freer admitted yesterday that NatWest, its bankers, were losing patience with Merrydown's perilous financial positions after the group had failed to meet its covenants, and Coopers & Lybrand, the group's accountants, had predicted the worst for the group.
Cider makers' shares have tumbled in the last 12 months as demand has fallen and competition intensified. However Mr Freer said he was confident that Merrydown can carve out a profitable niche. Merrydown's shares, which have collapsed from a peak of 298p, perked up 3.5p to 50p yesterday.
Most of the pounds 7m the group is raising will go in paying off debts and paying for staff redundancies.
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