A useful way to provide information that investors might want is to respond to specific questions. Below are some answers to queries that have been raised – if / when more questions are asked I'll answer them here:

How much money do you need, and what will it be spent on?

The target figure for the share offer is £50,000, which is in line with the 'rule of thumb' recommended by brewing consultants of budgeting between two and two and a half times the cost of the brewing equipment.
In addition to the brewery plant (hot and maybe cold liquor tank, mash tun, copper, fermenting vessels, pumps, pipes etc.) other major items of equipment to be obtained are casks, cask washer, simple bottling plant, hydrometers, thermometer and delivery vehicle.
There is a budgetary allowance for necessary building modifications, consultancy, training, marketing and insurances. Initial materials are also included.

How many shares are you selling?

We have no real idea how successful the share offer will be, so we've set a target of selling 100 A Ordinary shares at £500 each, representing half the value of the company, which we feel is a realistic valuation once the company is up and running. Please note that these shares represent 50% ownership of the company so in the event the company is wound up or sold then the shareholders would get 50% of the proceeds. The main voting rights, and control of the company, will rest with the B Ordinary shares held by Richard and Linda White.

What if the share offer is oversubscribed?

The stated aim is to have all applicants for shares granted at least one share. In the event of a slight oversubscription then additional A Ordinary shares will be available to ensure all applicants get the requests fully granted.
If the share offer is massively oversubscribed the Directors will decide whether to increase the scale of the initial brewery or to scale down the share allocation. The decision and its reasoning will be made public.

What will you do if you don't get the investment you are looking for?

Action we take will depend on the scale of under subscription, but we have a clear intention to create a brewery even if there is a considerable shortfall in expected response.
If the share offer raises above about £40,000 then the project should proceed much as described here, with perhaps some additional bank borrowing / overdraft facility, which will mean the project will be later to reach a profitable state but the profits will be shared between fewer people.
In the event that less than £20,000 is raised then the scale of the project will be significantly cut back, with a 2.5bbl brewery selected and a focus purely on bottled beer. This will reduce initial spend by eliminating the need for casks, washer and changing the delivery van requirements.
An amount raised between these two amounts and we’ll do a juggling of the plans to determine what can be achieved with the finances available.

What dividends can I expect?

No guarantees! But we'd like to be able to offer a modest dividend in the second year and a larger one in the third year. The financial projections attached give an indication of what might be achieved, and we hope they are an underestimation or pessimistic forecast!

Where else are you looking for money?

Grants are being pursued through Borders Business Gateway and wherever else opportunities arise!

I'd really like to be part of this exciting venture, but it's a big chunk of cash to find in one go, what can I do?

You could take the option of paying a regular amount each month and spread the payment that way, or why not get together with some friends and combine your cash to buy one or more shares together?

What happens if anything major happens to Richard White?

Richard will be doing most of the work at least until the brewery gets well established so a  'keyman' insurance policy will be taken out to protect investments in the event of his death, accident or injury. Options will include continuing under interim management, a short break in operation or a closing of the operation and return of funds to shareholders.

What will be the value of the shares if / when I choose to sell?

It's obviously impossible to predict the value of your shares at some future time. Freewheelin' Brewery is a commercial operation and subject to market forces like any other business, but it will be run with the aim of making a profit and increasing shareholder value.
There is no guarantee that you will get your money back, but you might get a fair bit more than you paid in!

Who can I sell my shares to?

The Freewheeln' Brewery would want first option on buying the shares if you decide to sell and will offer you a price it believes is fair given the value of the company at the time. If you decide to gift or sell your shares(s) to someone other than the Brewery then you must complete the share transfer form and return to the company, the transfer will only become active when the company actions the transfer.

Who will buy your beer? How will they know about it?

The immediate market is local – pubs, restaurants, off-licences and direct sales to the community, which should provide both a stable customer base and an opportunity for 'reference-selling'.
Pubs in Edinburgh are the largest potential market for cask ale, with pubs in Biggar, Penicuik and Peebles also potential customers. Similarly for bottled ales; off-licences and clubs in these locations are the primary extended market.
The marketing plan is to initially spread the word about the new upcoming brewery, by word-of-mouth and mailshot, then to follow-up with personal contact. It is expected that shareholders and members have a significant role to play in spreading the word — either by personal contact or leaving behind a 'calling-card' to raise interest.

What if you can't find suitable local premises?

It seems very unlikely that suitable local premises won't be available, as at this time there are two viable options under consideration, but if necessary the brewery could be located outside the immediate area, possibly even in an industrial unit. This would be as a last resort, when all local options have been explored.

Update: Unfortunately it has not been possible to find premises in and around Peebles, which was our original hope, and we have now settled on a unit in Peebles. On one hand this is disappointing but we believe it will prove beneficial as giving us easy access to a larger market, and linking closely with the 'Freewheelin'' activities in Peebles!

When will you start spending our investment?

The project will be considered viable once £20,000 in committed funding becomes available, at this point we will make spending decisions to create a brewery to meet the stated objectives described in the Invitation to Invest.
Note that this committed funding may not all be from the share offer – other sources of funds are being pursued – but it will not include bank loans / overdraft facilities.

How can the brewery develop further?

The intention is remain as a small craft brewery, serving customers within a range of no more than 30-35 miles from the home base – the guiding principle being that 'real ale' is best suited to being served and consumed locally to it's creation. So no plans to become a major supplier to Tesco!
However there are many ways in which the brewery can expand while remaining as a small craft brewery:

  • Increase the number of brews per week, the proposed plant can easily cope with brewing four times per week, providing significant expansion capability,
  • upgrade capacity by adding more fermenting vessels, and/or increasing the size of mash tun and copper,
  • install a parallel mash tun/copper system to enable concurrent brewing operations,
  • install conditioning tanks, filtering and carbonation equipment for production of keg beer,
  • enhance the bottling and packaging capability.

There is no expectation that share-holders would be expected to fund any of the above expansion – it would be funded through organic growth.
NB The UK Progressive Beer Duty threshold is currently set at 60,000 hectolitres pa, below which level the brewery pays a reduced rate of duty (50%) - no plans to exceed this level.

How long will the share offer be open?

The share offer is due to expire on 30th June 2013, except by prior arrangement. At this point key decisions will be taken regarding the size of premises and brewery that funds allow, and we need a fixed point at which to make those calls. If you need more time to make your investment decision, or to raise funds, please contact Richard to discuss. Shares may become available sometime in the future but you can expect them to be priced higher. Hope you feel the brewery venture is an exciting and fun development to be part of, and want to join in!