John McKenzie, Founder and Managing Director of GlenWyvis distillery, and Hazel Allen, Finance Director, explain how Close Brothers built a tailored lending package fit for their unique situation.
Hazel Allen, Finance Director
John McKenzie, Founder and Managing Director
Hazel: John, who owns this farm, had this idea that he would create the first community owned whiskey distillery in the UK, and indeed in the world.
John: My vision for GlenWyvis was to regenerate the town of Dingwall and to bring whiskey distilling back after a 90-year absence.
Hazel: As a start-up, we are particularly difficult. So, most start-ups will commence and they will have an expectation of trading at a profit within a relatively short of period time, two to three years. Whiskey doesn’t do that. For whiskey, you have to make your product and then you have to put it in a cask or barrel and leave it for at least eight years before it turns into something that is significantly profitable. Not only are we a start-up, with very little trading history, we’re also saying that they’ll be no profit and in fact we’ll carry on increasing our borrowing for at least the next seven or eight years. Very difficult proposition.
John: The key thing was raising the finance and getting that business planning in place. We identified that this was really difficult, you had to raise a huge amount of money and sell a product years down the line. Not traditional and lenders really would never get involved in that.
Close Brothers came up each time that we met with anybody, we were pointed in that direction. From our accountants, to traditional banks they all said Close Brothers is where you should be looking.
Hazel: Close Brothers have been really helpful to us in several ways. First of all, they were prepared to lend which we were very pleased about. Second of all, they’re lending over a longer term than is normal for lease finance, so seven years. And also, they were prepared to allow a delay to the start of those payments.
John: We realised that Close Brothers had this real non-traditional way of understanding the equipment, they knew exactly what we were trying to achieve with some soft-start lending that would get us to our production of whiskey in years to come. And also, the income that we will generate from the RHI. So, it really was a very tailored, specialised lending package that fits for us.
Hazel: I think one of the really good things, apart from the close personal relationship and the involvement, has been the speed of their responses. You can imagine that there is an awful lot to come together at the very end of this process, there’s a bill to sign off, equipment to sign off, loans to pull in, conditions to meet, paper to deliver, due diligence to do and having a fast response and flexible response just makes that process so much easier.
John: The advice I would give when you are looking at lending is, treat it as important as your product. It is so important that you take a lot of time to look at what fits for you.
Hazel: So, I think there are really exciting times ahead and I’m very proud to be part of this community organisation.