Cobra Beer's creditors owed £71m

A total of 340 unsecured creditors will be left owed a total of £71,741,912 as a result of the collapse of Cobra Beer in a pre-pack administration earlier this year.

Among the larger pub sector creditors are Wells & Youngs which is owed £1.7m, with a further £160,000 owed to its distribution arm. Camerons Brewery is also owed £160,000 while the Robert Cain Brewery is owed £70,000 and IMI Cornelius is £33,900 out-of-pocket.

A report by administrator PriceWaterhouseCoopers revels that Cobra was marketed for sale last summer and Wells & Young made an indicative offer in mid-January 2009 for the assets and brand rights of the business. But the directors of Cobra decided the offer provided very little value for the unsecured creditors and no value to equity holders. Rothchild, which has been marketing the business, then contacted the most likely buyers to explore other transaction possibilities and Molson Coors and Wells & Young expressed an interest in a joint venture.

Cobra then suffered a deterioration in its liquidity and working capital position and decided to pursue the Molcon Coors 50:50 joint venture plan. Molson Coors preferred to copmplete the transaction outside of an administration/liquidation and via a structure that preserved £53m of tax losses.

Molson Coors was also concerned that negative publicity from Cobra going into administration would taint and therefore reduce the value of the brand. Molson Coors therefore proposed a Company Voluntary Arrangement (CVA). The CVA won the backing of 78% of unsecured creditors but failed because three creditors were poised to wind the company up.

In particular, one key supplier insisted on a 10% price increase and then refused to trade on any terms. Molson Coors was concerned that a winding up petition — a "fissile and

unstable situation" — could further erode the brand and agreed to complete the transaction via an administration, buying a 50% share in the Cobra Beer Partnership for £12m.