©Scotch Malt Whisky Society
The Artisanal Spirits Company (ASC) has agreed on a new financing facility of £15 million through its new partner, Ferovinum.
ASC is the owner of The Scotch Malt Whisky Society (SMWS), a provider of premium single-cask Scotch malt whisky and other spirits. SMWS primarily sells its products online to a global audience.
The investment will provide ASC with increased financial flexibility for business development “via recognition of the significant appreciating cask spirit asset base,” the company said in a statement.
Under the initial agreement, Ferovinum has provided £2.6 million in cash to ASC based on a cask spirit parcel valuation of £3.8 million at a 70% loan-to-value ratio. The deal is valid for a maximum period of two years, with the same headline interest margin as ASC’s current RBS banking facility.
According to a statement, the Ferovinum platform enables ASC “to convert its maturing stock into a just-in-time asset at a truer market valuation”.
The casks in the initial transaction show a net book value (NBV) on the balance sheet of £0.8 million, a current bank valuation of £1.3 million, and Ferovinum’s valuation – using market, external and internally generated intelligence – as £3.8 million, representing a 380% and 191% incremental valuation on the NBV and bank value, respectively.
The financing enables ASC to access funds from “a larger financial pool” without increasing its overall debt. The company’s debt position, therefore, “remains as previously guided,” said ASC.
Andrew Dane, CEO of ASC, commented: “This is an exciting development giving the group further financial flexibility without increasing gross debt whilst demonstrating the value of the group’s assets”.
“ASC has two value streams: the core trading business and its inventory, where the value of our spirit casks has been proven by Ferovinum extending capital at retail valuations underpinning the worth of our inventory, providing financial flexibility and giving us further confidence in the company’s investment strategy and asset base.”
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