BREWERS ARMS - COMMUNITY PUB BUYOUT 2021
Minutes of meeting
Anstruther Hall, Regents Theological College, West Malvern
7.30pm, Thursday 10th February 2022
Committee members: Brian O’Connell (BOC), Andy Wood (AW), Mark Gent (MG), Nic Comley (NC), Rob Rankin (RR).
Audience in the hall: 75.
Via Zoom meetings: 32 connections.
Steering committee introduction
BOC introduced the committee members to those present.
The community bid web site is up and running. www.brewerscommunitypub.co.uk. Any questions that anyone has on the bid will be posted there (under the FAQ section, accessible via Options on the home screen).
Progress so far
The community bid has a moratorium until April 25th. No-one other than a community or similar can bid until that date. After that there is a further moratorium, lasting a year, where the pub has to be marketed as a pub. After that period it can go on the open market (subject to planning permission).
The committee has approached The Plunkett Foundation, the UK’s leading charity for helping rural communities create and run community-owned businesses, and we benefit from their advice.
Registration is underway for a Community Benefit Society (CBS) – see later for more. Rules for the CBS are almost finalised and will then be submitted to the Financial Conduct Authority.
Questionnaire survey results have been analysed and published on the community bid web site.
The Brewers Community Pub Facebook page, https://www.facebook.com/groups/650136099628866, is up and running and already 100+ have joined up
Actively looking for grant assistance.
Draft Business plan/financial figures prepared and will be published in due course.
Draft Share prospectus has been prepared . See later for more.
Community Benefit Society (CBS)
It will be called the Brewers (West Malvern) Community Pub Limited.
Current intention is for each share to be priced at £250 with maximum shareholding by a single person of 100 shares (£25,000).
If the share issue is oversubscribed (i.e. investment requests exceed the amount that needs to be raised), the subscriptions will be cut back, with preference given to those who seek to invest smaller amounts. (Those who wish to invest higher amounts will be cut back more than those who bid lower.)
The CBS runs like any other company – annual general meeting, candidates for the board, audited accounts etc.
A business plan has been prepared. The plan is based on very detailed information received from Sue Adamson, with figures adjusted as necessary for inflation, rises in council tax, minimum wage etc.
The business plan has two primary purposes: to give a prospective tenant an idea as to what income they could expect and (therefore) to provide an expected cash flow estimate for the CBS.
The business plan is still under review. It will be published in due course.
It is a so-called exempt share offer:
· One person, one vote – regardless of amount of shares.
· The shares are not traded on any exchange, which is beneficial in terms of paperwork, processes etc.
· But it does mean any investment is fully at risk because there is no form of statutory regulation. However the pub itself will be our security
The share prospectus will fully explain the risk.
However, NC pointed out that there are now around 150 community owned pubs across the UK, and none have, as yet, failed.
Looking at seed enterprise tax relief.
The share offer document will be open for three months. If the necessary investment to buy the pub cannot be raised all monies less any costs incurred (that are not covered by grants and donations) will be returned
If the pub is purchased, shareholders/investors will be eligible to receive interest payments on their investments. (Note: This is not dividends.) The interest payments will commence at a time when it is deemed by the sitting committee to be prudent and affordable. Highly unlikely that any interest payments will be made in the first year, and possibly not even the second year.
Investments can be returned to investors – however only after a defined period and, even then, will be capped at 15% of total (remaining) investment per year. This is to prevent instability in the funding model of the CBS (i.e. can’t have lots of people withdrawing lots of cash at the same time).
All details will be in the share prospectus, for which the aim is to publish/issue before the end of the month.
BOC has approached a company to do an independent valuation of the pub. Funds are required to pay for this.
Money/immediate cash flow (pre-purchase)
£400 has already been spent on the bid so far.
More money will be required when the CBS is formed.
We are looking to get a grant from the local council/councillors.
May need to ask for small non-returnable donations from the community e.g. £10 each. Will be considered for the next public meeting.
After the pub is purchased
The first tranche of any spare money will need to be spent on the toilets, followed soon by the kitchen.
By the constitution of the CBS, the pub must be a community asset, used by numerous groups, for numerous activities, not all of which need to be centred on alcohol. In short, it cannot be simply a ‘beer palace’, not least because that will return the pub into the spiral of decline we have seen in the last few years.
Questions and answers
BOC: An ad-hoc group, chosen from the shareholders will be created. This group is not necessary drawn from members of the steering committee. The group needs to define what they’d like the tenant to do (sell local ales, requirements for food etc.), advertise the post, interview candidates, and select the preferred tenant.
Can Admiral reject our offer?
BOC: Yes and no. As the seller, Admiral is entirely within their rights not to accept our offer or indeed a realistic offer from some other interested party. However, if that is because they want way beyond a fair market value for the Brewers as a pub, and they then they apply for planning permission so as to sell the pub as a residential property, this can be challenged.
With the share issue is there any restriction on the amount of money that can be raised from outside the local community (e.g. from people abroad)?
NC: No – but in practice it depends on the relative size/wealth of the local community. If the local community has enough funds within itself to buy the pub, the outside investment is likely to be low. At the other end of the scale, if the local community is tiny, the need for outside investment may be considerable. West Malvern is probably somewhere in the middle of this scale. With some community buyouts, Nic is aware of people who just want the pleasure of saving pubs from development and/or being able to say they own (part of) a pub, even if they have no intention or ability of visiting. In such cases the investment is typically very small – just a helping hand.
Can the CBS accept money that is not attributable to share capital?
BOC/NC: Yes. Donations, grants etc. can all be paid into the CBS bank account. This will be used for furtherance of the aims of the CBS e.g. maintenance of the property.
What control does the community have on the on-going running of the pub?
NC: Terms and conditions can be included in the tenancy agreement e.g. relating to the proportion of real ales that must come from local breweries. But the Ts and Cs mustn’t be so restrictive that the tenant’s hands are tied so they cannot run the business at an acceptable level of profit. There should also be regular reviews within the tenancy agreement where various issues, ideas etc. can be discussed between the tenant and the CBS.
Should we talking to other community buyout groups in order to learn lessons as to how they selected their tenants/managers?
BOC: Yes. At the next public meeting the intention is for representatives of other buyouts to tell us what they did.
NC: Also the Plunkett Foundation is a mine of information in this respect anyway.
BOC: A particular challenge with the Brewers is that the small living accommodation is limiting in what type of tenant can be attracted (e.g. can’t have a large family).
Will it be the case that we can’t put a tenant in straight away (after successful purchase of the pub)?
BOC/NC: Yes. This is highly likely. Various ‘spruce up’ activities will probably be needed in order for the tenant to walk into an attractive property.
If the pub fails will the shareholder investments be repaid?
BOC: The ultimate safeguard to investment is the value of the property itself. At worst the sale of the pub will be used to repay shareholders with of course no guarantee that monies will be returned in full.
NC: Experience with other buyouts show that it is the tenancies that fail, not the pub. Sometimes this will be because the tenant has an unrealistic business plan. Alternatively, of course, it can be the CBS having unreasonable demands. The CBS should always have the flexibility to prevent tenant failures e.g. by regular dialogue and review, perhaps reducing the rent for a while. Nevertheless, it does have to be accepted that tenancy failures can and do happen.
BOC: The business plan we are preparing is cautious/conservative in what is expected.
Now that the pub is closed do we need to vigilant for vandalism, damage etc.?
BOC: This is not our responsibility. The pub is still owned by Admiral. It is up to them to work out a strategy for the empty premises. If there is damage in the interim i.e. before the community owns the pub, this will directly affect the price we offer.
Has a building survey been carried out?
BOC: No. But plans are in place to get one done. It will be a mix of physical building survey and business valuation.
Can we set up a JustGiving page to fund immediate cost requirements of the committee?
BOC: In the immediate short term we are going to approach local councillors who have indicated that they may make discretional payments from available funds. If more money is needed, we will look at other revenue streams.
Are the shares inheritable?
BOC: Yes. If a shareholder dies, the shares become part of their estate – and dealt with following normal processes.
NC: Shares cannot be sold on. If a shareholder wants to give their shares to someone else, e.g. a relative, this must be performed via the CBS. The shareholder cannot make a direct transfer.
Is there a way of making personal donations?
NC: Yes. (Anyone who wants to do so, please contact BOC.) Gift Aid cannot be claimed on personal donations.
Taking away a little slip tonight will not be enough to get the message out to everyone. What else is planned?
BOC: Yes. We will be getting a newsletter printed off imminently and posting it around the village. Further calls also to be made via the web and Facebook sites, also email.
NC: Share prospectus will be out in a couple of weeks. That is the ultimate vehicle for attracting investment pledges.
The share capital is to buy the pub. What happens if you need money for additional improvements? Have you heard of the People’s Fundraiser?
BOC: No routes for fundraising are off the table.
Has contact been made with the planning department of MHDC? Recommend to do this early so that we can explore options for extending/enhancing the pub.
BOC: No contact made with MHDC as yet. Mark Gent, who is on the committee, is looking at what building work could be considered.
NC: There may be something available via the Community Building Loads fund.
In the past the Brewers has had strong connections with various community groups e.g. the local school and held events for these groups, firework displays etc. What has happened to such recently?
BOC: They certainly haven’t happened as regularly as they used to. But hopefully that will change under community ownership and previous connections can be re-established.
BOC: Yes. It is included as part of the sale package of the pub.