Artisanal Spirits Company expands facility, inks Malaysia deal
By Josh White
Date: Tuesday 20 Dec 2022
(Sharecast News) - Scotch Malt Whisky Society owner the Artisanal Spirits Company has extended its agreement with Royal Bank of Scotland to increase its existing revolving credit facility to £21.5m from £18.5m, it announced on Tuesday, and to extend its term to 19 December 2025, broadly representing a two-year extension.
The AIM-traded firm said interest would accrue at 2.25% over SONIA, meaning the new rate was a 0.25% reduction in the facility's margin.
Based on current utilisation of £16.5m, that would equate to an annual saving of around £40,000 of interest costs.
The board said the new agreement retained the existing 'springing test' clause, meaning that no covenants would be tested while the group maintained an appropriate stock balance.
It said the RBS facility provided it with additional flexibility to expand and grow all aspects of its business, ranging from membership, investing in the group's brand and whisky stocks, as well as continuing to increase its international reach.
The directors said they would update the market on trading for the financial year ending 31 December on or around 23 January.
Additionally, the company's Scotch Malt Whisky Society has signed a new partnership agreement in Malaysia, migrating its operations in that region to Drinks Alliance.
The agreement would provide a new route-to-market in the region, and further strengthen its geographic footprint in south east Asia.
Malaysia is the 12th largest market within the global ultra-premium scotch malt whisky sector based on value, the company noted, and was estimated to be worth $102m in 2021, up by 49% over 2020.
The move followed the group's recent entry into South Korea in October with an inaugural franchise agreement in that location, as Artisanal Spirits expanded its global footprint into new growth markets.
"The successful increase in the banking facility is testament to the strength of ASC's consistent strategic delivery and extensive asset base of unique and appreciating whiskies and other spirits," said managing director David Ridley.
"The extended facility provides us with further firepower to continue to grow our membership base both in the UK and internationally, to launch the group's American whiskey proposition in the first half of next year, and to continue to invest in further spirit stock for ageing, underpinning ASC's future growth."
Ridley said the firm had a "clear strategy and a pioneering model" to maximise the benefit from "favourable" long-term growth drivers.
"We will continue to execute against our growth strategy to deliver a doubling of sales between 2020 and 2024 in a disciplined and measured way with expansion evidenced by our international partnership agreements in territories such as Malaysia announced today and in South Korea in November, two of the fastest growing whisky markets in the world.
"We have an exceptional opportunity and remain well positioned to capitalise on it with whisky stocks to satisfy all demand until 2028 and 75% of demand until 2033."
At 1424 GMT, shares in the Artisanal Spirits Company were up 1.93% at 68.8p.
Reporting by Josh White for Sharecast.com.
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