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Cobra Beer in pre-pack administration 1 June 2009

Cobra’s future had been uncertain for some months, after it ran into what administrators PricewaterhouseCoopers (PwC) called “financial difficulties” triggered by the economic downturn.

Molson has put up £14m to pay off Cobra's secured creditors and will now win control of a debt-free business that Lord Bilimoria tried to sell last year for as much as £200m.

Last November Cobra announced it was appointing bankers Rothschilds to find either a strategic partner for the group or a potential bidder for the business, but this search proved fruitless.

The group, which predominantly supplies bottled beer to Indian restaurants but which had recently launched a push into pubs, went into administration last Thursday. It was immediately acquired by the joint venture, formed by Molson Coors UK, which will control 50.1 per cent of the new entity and 49.9 per cent by a vehicle controlled by Bilimoria.

Despite sales of nearly £200 million in the past year, the company has yet to make a profit in the past 20 years; the last set of accounts for the business to 2007 show an annual loss of £13 million.

Zelf Hussain, joint administrator and director at PwC, said: “The last few months have seen an intensive period of activity as we worked with Cobra Beer to explore the options available to them.
“Recently we have performed an extensive marketing exercise and feel that this deal represents the best outcome for the business and will ensure the Cobra brand continues to exist.”

The management structure of the joint venture company will include Lord Karan Bilimoria as Chairman, with representatives of the Executive team at Molson Coors.

Molson Coors said Cobra had seen a year-on-year increase in sales volumes of 20 per cent in the nine months ended April 30, 2009, against an eight per cent decline in the UK beer market.
Bilimoria said working with Molson Coors would "accelerate the Cobra brand’s development and realise its true potential.

"The agreement to establish the joint venture company with Molson Coors is the result of a long and thorough process whereby, alongside our advisers, we explored a variety of options to maximize value for our creditors and stakeholders."

Mark Hunter, chief executive, Molson Coors (UK), said the joint venture “will enable Cobra Beer to move on to the next stage of its brand evolution and open up significant opportunities for Molson Coors, including ethnic restaurants, where Cobra Beer has built an impressive distribution base."



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