SKN | HSBC Moves to Secure BrewDog Loans as Break-Up Risk Intensifies

Key Takeaways

• HSBC has secured its loans against BrewDog’s flagship Ellon brewery.

• The craft brewer has launched a sale process overseen by AlixPartners amid mounting losses.

• Co-founder James Watt is reportedly preparing a £10m rescue bid as break-up fears grow.

HSBC has taken additional steps to protect tens of millions of pounds in exposure to BrewDog as the craft beer group edges closer to a potential break-up. The bank has secured its lending against BrewDog’s large production facility in Ellon, Aberdeenshire, giving it enhanced rights over the asset should the brewer fall into administration.

The move signals heightened concern among creditors as restructuring discussions intensify.

Asset Security Strengthens Lender Position

Recent filings show HSBC’s debt is now formally secured against BrewDog’s flagship brewery complex, which includes brewing operations, a distillery and hospitality facilities. The Ellon site produces high-volume brands such as Punk IPA and Hazy Jane and represents one of the company’s most valuable tangible assets.

Securing the property places HSBC in a stronger recovery position should a sale fail. The bank is BrewDog’s primary lender and faces exposure alongside other creditors in a distressed outcome.

Sale Process and Break-Up Scenario

The restructuring process, overseen by AlixPartners, has triggered a fast-moving bidding round. A second phase of offers is expected shortly.

Industry observers believe a break-up is increasingly likely, with brewing assets potentially separated from BrewDog’s extensive bar estate. Hospitality assets are viewed as less attractive given higher operating costs and tax pressures on the UK sector.

Complex Capital Structure

The company’s balance sheet complicates any transaction. Private equity investor TSG Consumer Partners invested £213m in 2017 for a 21% stake, structured with an 18% compounded return guarantee. That clause reportedly leaves BrewDog with more than £800m in obligations tied to TSG, raising the hurdle for any equity value recovery.

Outstanding bank loans total roughly £92m, including £25m due within six months.

Founder-Led Rescue Attempt

James Watt, who stepped down as chief executive in 2024 but retains a significant shareholding, is assembling a consortium to mount a rescue bid. Reports suggest he plans to inject £10m of personal capital into an acquisition vehicle aimed at buying the group’s core operations.

Potential industry buyers reportedly include Carlsberg, Heineken and Anheuser-Busch InBev, though formal offers remain unclear.

Financial Strain and Market Headwinds

BrewDog posted a £37m loss in 2024–25 on revenues of £357m. Slowing sales growth, higher costs, and softer alcohol consumption trends — particularly among younger consumers — have weighed on performance.

Crowdfunded “punk equity” investors, who collectively invested around £75m over multiple rounds, now face significant dilution or potential wipeout under a distressed sale scenario.

Outlook

HSBC’s decision to secure hard assets reflects a defensive posture as restructuring accelerates. The next stage of bidding will determine whether BrewDog survives intact, undergoes a strategic break-up, or enters formal insolvency proceedings.

For creditors, asset security enhances recovery prospects. For equity holders, value preservation appears increasingly uncertain as financial obligations outweigh current earnings power.

For confidential discussions regarding distressed lending exposure, creditor positioning strategies, and restructuring risk assessment within leveraged consumer brands, our senior advisory team is available for discreet consultation tailored to institutional and cross-border investment mandates.