Cooley Distillery is likely to raise £3 million in a share placing to raise funds to buy out the shareholders in five BES whiskey manufacturing plants with which Cooley has links. A £3 million placing would involve about 20 per cent of the company being sold to outside investors.

Cooley chairman Dr John Teeling said the group is looking at a number of financing options to cover the cost of buying out the shareholders in the whiskey manufacturing.

But having borrowed £1 million to buy out the shareholders in Kilbeggan Distillery, Dr Teeling said that a share placing was the most likely option.

He said Cooley would look at placing stock with some of its overseas distributors or with finance houses in advance of a stock market listing for Cooley. No decision on the financing would be taken until spring next year, the Cooley chairman added.

Last year, Cooley raised £2.5 million in a rights issue towards the buyout of Whiskey Manufacturing shareholders for £3 million, while Forbairt invested £1 million in Cooley redeemable preference shares. Half of the money from Fobrairt went towards a new effluent treatment plant with the other half being spent on new distillation equipment.

Last year proved to be a landmark for Cooley as it reported its first profit after 11 years in existence. The profit figure was £71,000 on sales of £3.5 million compared to a loss of £134,000 on sales of £3.2 million in 1995. For the first time, sales of whiskey were over 100,000 cases - the minimum required for Cooley to break into profit.

Growth in the current year is likely from existing markets with "not a lot coming from new markets", said Dr Teeling. Cooley's main markets are own-label manufacturing for supermarkets and wine stores in Ireland, Britain, France and the Benelux countries. Its other main markets are high-margin, low-volume specialised products such as its Connemara brand as well as from its existing brands.