Co-operative Development Scotland

Co-operative Development Scotland (CDS) has played a central role in supporting West Highland Free Press in its ambition to become an employee-owned business, which finally concluded on 28 October 2009.

Founded in 1972 as a left-wing weekly paper, and carrying the slogan "An Tir, an Canan 's na Daoine (The Land, the Language, the People)", the newspaper has become one of the most iconic in the UK, championing causes such as the Gaelic language and campaigning on major environmental issues and land reform.

At a time of turmoil in the newspaper industry, the Free Press is again blazing new ground by deciding to move into employee ownership with the support of CDS and the Baxi Partnership, the UK's leading employee ownership investment vehicle.

With the traditional bank route closed, Baxi, which controls a £20 million fund, was able to bring together a funding package that allowed 10 employees to purchase the title from the paper's five founders, including former British government minister Brian Wilson.

Baxi was introduced to the newspaper's employees by Co-operative Development Scotland, which aims to increase the number of employee-owned and co-operative businesses in Scotland.

Since this initial introduction Baxi helped the WHFP set up an employee benefits trust that will hold the shares for the employees and ensure the paper remains independent and rooted within its local community.

Baxi also spent time coaching the staff taking up the employee ownership opportunity and helping them prepare for their new role as owners.

Paul Wood, Managing Director of the West Highland Publishing Company Limited, said:

"This will be the paper's first change of ownership and despite what is happening in the wider industry we are optimistic about the future.

"The Free Press has always been a breeding ground for talent and employee ownership will not only help us retain that talent but make even better use of it.

"Our readership is loyal and discerning and we think we can build on this base and further develop the business through the greater participation that employees will have in the way the business is run. Through our staff we are already identifying opportunities for developing content, utilising new-media and developing a news agency side to the business.

"Having our futures in our own hands would not have been possible without the assistance of Co-operative Development Scotland and Baxi. Traditional routes of finance, such as the bank, were not open to us, so over 13 months Baxi brought together the financial and support institutions to back us and then worked with the staff to give them the confidence to face the challenges and opportunities that running your own business brings.

"As a business succession solution employee ownership offered everything the five founders wanted for the future of the paper."

Sarah Deas, Chief Executive of Co-operative Development Scotland (CDS), added: "We are delighted that West Highland Free Press has joined Scotland's growing number of employee-owned businesses. Research shows that employee-owned businesses are more productive and sustainable, so there is enormous potential for this type of ownership model to contribute to the development of Scotland's economy. Encouraging more business owners to consider an employee buyout is a priority and we are working to build awareness across the business community. We have supported West Highland Free Press through to employee ownership, and hope that their success will encourage other businesses to consider an EBO."

John Alexander, Managing Director of the Baxi Partnership, said: "The decision of the West Highland Free Press to make this transition highlights that employee ownership is a viable model for companies of all sizes. The key features of any deal are getting the right funding package and also ensuring the employees understand their new responsibilities - they are the company's biggest asset and at a time when quality content is the key to a successful newspaper it is vital that the Free Press unlocks the potential that comes from allowing employees greater participation.

Brian Wilson, founding editor of the West Highland Free Press, believes employee ownership is the right move for the paper and now is the right time.

He said: "We wanted the paper to remain independent while offering a great opportunity to the employees who have served it loyally. I am sure that the Free Press will continue to flourish on the basis of quality journalism, service to the community and sound commercial management".

Earlier this year the UK Employee Ownership Index (EOI) revealed that employee owned companies outperformed the FTSE All-Share in the second quarter of 2009 by 19.9%.