WHEN Iain Pittman was parachuted into Arran Aromatics in January, 2009, the candle and soap maker was just three days away from being wound up by the taxman.
“It was a mess,” says Pittman, who stood down last week as chairman after securing a £2.8 million investment from the Business Growth Fund (BGF).
“I was brought in at the 58th minute of the 11th hour. They hadn’t filed accounts for five years and they owed HM Revenue & Customs £180,000 in pay-as-you-earn.
“Then we discovered that it wasn’t £180,000 that they owed the Revenue but £590,000 because of VAT, too.
“We managed to get a three-week extension from HMRC with the support of Bank of Scotland and so we looked at ways to rescue the business.”
Pittman – who was introduced to the family-owned company by accountancy firm Campbell Dallas – looked at every option from a trade sale through to bringing in venture capital or a private investor. Eventually, he ended up buying a stake in the business himself, alongside finance director Tony Owens.
“The bank then agreed to a financing package – but remember this was in February, 2009, when the banking world had just imploded,” says Pittman. “They said they’d give us a run at it for six months. The Russell family, who had founded the business, put some money into it.
“Earlier this month, we settled with the Revenue and now we’re fully clean,” he adds. “For the past four years, we’ve run the business very prudently and tried to harness the value of a brand that’s been here for 25 years and has some big high-profile customers.”
Those clients include Abode Hotels, Macdonald Hotels and the DeVere Group, which owns Cameron House on the banks of Loch Lomond.
Pittman adds: “We’ve fixed the business and got it stabilised, but what we needed were the resources to leverage the brand.”
That leverage is now coming from the BGF, the £2.5 billion investment vehicle set up in 2011 following discussions with the UK government by Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered.
The fund invests between £2m and £10m into businesses that turn over £5m to £100m in return for an equity stake and a seat on the board.
Under the deal with Arran Aromatics, Pittman will be replaced by Alastair Kerr, a former head of Body Shop’s African, European and Middle East unit and a non-executive director at Dundee-based Alliance Trust, Fuller Smith & Turner and White Stuff.
BGF investment director Duncan Macrae will also take a seat on the board.
Yet Pittman and Owens plan to stay with the business as shareholders, along with Janet Russell, who founded the company in 1988, and her sons, Andrew and Duncan. All of the investors are taking the same dilution from the BGF deal, with no-one being bought out.
“People keep saying to me, Arran Aromatics – that must turn over £25m doesn’t it?” says Pittman. “In my wildest dreams. We turn over £5.2m at present, compared with a record £7.2m in 2005. We want to grow that to £15m over the next five years.
“This isn’t finished. This is stage two. There’s a long way to go with this.”
Working with Arran Aromatics has soaked up much of Pittman’s time over the past four years, but the rescue specialist was also chairman of IT firm Scolocate until December, when it was sold to Pulsant for £26m. He is also a non-executive director at Linn Products after leading the 2007 turnaround of the hi-fi maker.