Lord Bilimoria has said that he will continue paying off his creditors after collecting a dividend of £4.2 million from his shareholding in the Cobra lager brand.
Lord Bilimoria, who founded Cobra in 1989, teamed up with the US brewer Molson Coors to rescue it from collapse in 2009 via a pre-pack administration but promised to repay all Cobra creditors from his share of the dividends.
He emerged as chairman with a 49.9 per cent stake, while 340 creditors were owed more than £70 million. Creditors with insurance policies have been excluded, even though such policies typically pay out only a percentage of claims, leaving many out of pocket.
Charles Wells, the Bedford brewer that produced Cobra under contract, was owed £1.5 million but received only 90 per cent via its insurance policy.
A spokesman for the peer said: “Since 2009 the vast majority of dividends received by Karan Bilimoria after the formation of Cobra Beer Partnership has been used to settle creditors. This was also the case in 2019. The joint venture with Molson Coors was initially for a period of ten years. In May 2019 it was extended. Over the remaining years, Lord Bilimoria plans to continue to settle remaining creditors from his share of the dividends.”
In its 2019 accounts filed this week, Cobra Beer suffered a 2.2 per cent fall in turnover to £53.4 million on the back of a small decrease in volumes. The volume decline and increased marketing spend sent pre-tax profits 12.6 per cent lower to £93 million. Dividends of £8.5 million were declared, down from £8.7 million in 2018.
Cobra reported a decline in trade on the back of Covid restrictions, but concluded it was a temporary hit and did not require an impairment to be taken against its accounts.
The board said that the company is likely to require short-term material additional cash funding during early 2021, and added that it had secured access to sufficient funds for at least 12 months.