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Thwaites brewery takes £11.9m hit in banks scandal
BLACKBURN brewery Thwaites took an £11.9m cash hit from the bank rates fixing scandal – plunging the firm into a rare pre-tax loss.
The company will have to pay £11.9million this year to cancel an interest rate swap agreed with a financial institution five years ago, chief executive Rick Bailey has revealed.
The decision to buy the firm out of the 22-year deal was taken as part of a recent review of its long-term financial strategy, but does not affect the company’s operational strategy, including moving the brewery out of Blackburn town centre.
The change plunged Thwaites from an operating profit of £12.4million into a loss of £8.2million for the year to March 31 2012, down from an overall profit of £5.3million for 2010/2011.
The other exceptional factor behind the loss was a reduction in the valuation of the company’s property portfolio.
The company’s annual report said that: “Due to the continued turmoil on the financial markets and the adverse impact on the valuation of our swap contracts, we have undertaken a review of our longer-term funding requirements, including the costs of the new brewery, and have taken the decision to pay off swap contracts that are not highly likely to be used against future borrowings.”
The government is promising a review of banking practices and an inquiry into interest rate fixing.
Mr Bailey refused to be drawn on who the lender behind the swap was, and whether Thwaites would seek compensation in the light of current developments.
He told the Lancashire Telegraph yesterday: “We shall be monitoring the situation very carefully.
“We will await the outcome of any reviews, or inquiries, before making any decision on what to do next.”
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