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09.06.03

NORTH EAST & CUMBRIA TV

Chairman lifts lid on deal which closed Vaux

Inside Out, 大象传媒 ONE (North East & Cumbria), Monday 9 June, 7.30pm

Former Vaux chairman Sir Paul Nicholson tonight lifts the lid on the boardroom decisions which closed the Sunderland brewery in 大象传媒 ONE's Inside Out programme for the North East and Cumbria.

Sir Paul, whose family ran Vaux, says the brewery which had existed on Wearside for 162 years should never have closed.

His tells Inside Out: "They were desperate to try to justify the unjustifiable. It was a feeble decision to cow-tow to their City gods."

More than 600 jobs were lost when the Swallow Group closed the Vaux Brewery in 1999, but Sir Paul claims that the closure did not bring in the cash the board had expected.

"It should never have happened," says Sir Paul.

"There should still be a brewery here and there could have been a brewery here employing hundreds of people and contributing to the economic life of Sunderland."

In 1998, the board thought it could make more profit by closing the brewery and selling off its pubs.

Sir Paul says: "I told them that their numbers were wrong, but they chose to ignore me."

A management buy-out, headed by Sir Paul's brother Frank, offered 拢70 million to buy the brewery and some of the pubs.

But it was rejected when the board was later told it could receive 拢15 million more than the management buy-out bid if it went ahead with the asset strip.

Sir Paul resigned as company chairman in March 1999 when the board made its decision to close Vaux.

He says: "They said that by closing the brewery they were going to be 拢15 million better off.

"The big shareholders put pressure on聟 such pressure that they thought it was much easier to close the brewery rather than face the wrath of the big shareholders."

He claims the closure of Vaux probably made two to three million pounds less than the board would have received from the management buy-out.

He says costs were higher and sales prices lower than expected, probably because the pension deal cost millions more than planned and the pension fund did not have a big enough surplus.

Peter Catesby, the chief executive who steered Vaux through its break-up, tells Inside Out: "Regrettably, we had been buying trade through giving loans to people with insufficient security for the loan.

"Very often these were loans called in by other breweries."

However, Sir Paul says that many pubs did not repay loans they owed to the brewery.

He says: "Those loans were good and they would have been good if it had been an on-going business.

"But when you wind up a business and it's no longer a going concern, no-one is going to try and pay you back."

Mr Catesby also says the packages offered to Vaux employees were the best ever offered by a North East company.

"They were a very reasonable reward for the hard-working people who had been very loyal to Vaux for a long time," says Mr Catesby.

"I was not going to be in a position where I had to face someone like you and say why our package of redundancy was not as good as, say, Scottish and Newcastle."

But Sir Paul responds: "How very generous of them. I am sure that people involved would have much rather kept their jobs."

Sir Paul still believes the best option would have been for the board to accept the management offer and then sell off the pubs at a later date 聳 so helping the investors get more money and keeping hundreds of jobs and a century-old tradition of brewing alive in Sunderland.

"As soon as I relaxed my grip on the company, it did not last very long," adds Sir Paul, whose memoirs are published this week. "My biggest mistake was not to get my succession right."

Notes to Editors

大象传媒 ONE's Inside Out must be credited if any of this story is published.

Pictures for media use only are available by contacting 大象传媒 North East & Cumbria Press Office.

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