Tory peer stumps up £2m loan as Gusbourne’s losses widen

Tory peer Lord Ashcroft, the majority shareholder of English sparkling wine company Gusbourne Wine, has stepped in to boost the company’s cash reserves after it recorded losses before tax of £1.76 million, up from £1.63 million last year.

According to Gusbourne’s results, which were released this week, the peer stepped in with a £2m loan last week to meet “immediate working capital requirements”, the company said. The loan is due to be repaid in October, with interest charged at 10%, rising to 15% if it is late.

It is the second short-term loan made by Lord Ashcroft, who last year loaned the group £1million (with interest of 7%). This was paid back in September, in part by the peer’s acquisition of £2.7 million worth of new shares in a round of fund raising that saw the company raise a total of £3.7 million through the issuing of new shares to investors.

He currently owns a 72.4% stake in Gusbourne and following last year’s investment, has a total of 33,005,663 ordinary shares.

The group has recently invested in boosting its vineyards, winery capacity, and stocks of wine and noted that further funds would need to be raised in order to achieve its long-term growth plan and support marketing and branding, and said this would be through equity or further debt. However Ashcroft has also committed to providing further funding for at least a year if funds couldn’t be obtained through equity or loans.

A bank loan of £2,025,000 which was due for repayment in September 2018, has been extended until November 2021.

The company statement said its loans, finance leases, other borrowings and deep discount bonds amounted in total to £4.934million at 31 December 2018, up from £4.778m in 2017, and represented 34% of the group’s total equity, down from 39% in 2017.

Meanwhile turnover at the sparkling wine producer grew 26% to £1.261 million, up from £998,000 the previous year, it said.

The Kent-based group now has 231 acres of mature vineyards with the most recent 2015 plantings set to reach production maturity this year. A further 57 acres are set to be planted in 2020 on land that has been leased on a long-term basis in West Sussex, boosting the total land under vines to 288 acres, 136 in West Sussex and 152 in Kent. It has also boosted investment in operations, including additional plant and equipment,

Shellproof, Lord Ashcroft’s wine investment company, bought Gusbourne in 2013 for £7 million from former consultant orthopaedic surgeon and current chairman Andrew Weeber, who had spent 10 years converting the former “turnip patch” into a vineyard.

The news comes shortly after industry experts warned that the English sparkling wine industry needs to adopt a more coherent approach to production and supply in order to grow sustainably, which was reported exclusively by db this week.

Last week Wines of Great Britain (WineGB) released the latest planting figures confirming that around 3 million vines were planted this year – around 690 hectares of vineyards,  boosting the land under vine by around 24%, which is double that planted in 2018 (1.6 million vines) and three times the 1 million vines planted in 2017.