Share placing venture to boost Belhaven by £25m

Belhaven Brewery yesterday unveiled plans to raise £25m to give it the firepower to expand its pub estate by more than one-third.

The Scottish group behind Belhaven Best and St Andrews Ale launched a share placing to raise £24.9m after expenses. The offer is fully underwritten by Collins Stewart, the company's stockbroker.

Stuart Ross, the chief executive, said the new funding would "enable us to deliver our strategy of growing our estate to 300 pubs by the end of 2005". The group already has 184 sites across Scotland, mainly in suburban and student-orientated locations.

He said most of the money had already been committed to halving the group's bank borrowings to £25m. "We have £100m of assets so we can borrow quite heavily against that going forward," Mr Ross added. The company said it felt its pubs arm had the potential to grow at a "significantly faster rate" than its drinks operations. It owns Scotland's oldest brewery, situated in Dunbar, and has a drinks distribution business.

Mr Ross said the focus on pubs did not signal the group's intention to follow in the footsteps of the major brewers and hive off its brewery. "Belhaven is not about to become a pub company," he protested. Mr Ross said the group would swoop on any parcels of pubs that became available following the sale of Scottish & Newcastle's pub estate.

"I think it's unlikely any will, but we would be interested," he added. Details of the fundraising came as the company announced a 13th year of successive year-of-profit growth. Bucking an industry downturn that has forced pub companies such as Old Monk, Po Na Na and Porter Black into administration, Belhaven reported an 18.1 per cent rise in pre-tax profit to £10.8m. Operating profit from its pubs division soared 30 per cent to £9m after added 32 new properties.

"We have experienced an excellent start to the current financial year with trading volumes in both pubs and drinks ahead of the previous year and our internal budgets," the company said.

Mr Ross attributed the group's success to "our foresight to stay out of congested city centres". He said Belhaven's pubs relied on "individual flair and creativity" rather than a single theme to attract customers.

Separately, Regent Inns, the pub group behind the Walkabout and Bar Risa/Jongleurs chains, revealed that underlying sales across its estate had slipped 6.9 per cent in the 49 weeks to 14 June.