re: looking less silly Ge has emerged as the financier, but the extra debt, costs of the deal, 2 new listings and existing debt from Yarraman will only increase interest payments and dilute ETW stockholders. cant see this as being in our interests.
Separately grape havest estimated to be 20% down this year which is great news for the "wine lake" and future prices.
"US FINANCIAL powerhouse GE has emerged as the driving force behind Yarraman Winery's bid for debt-laden West Australian winemaker Evans & Tate.
GE is believed to be the mystery multinational financier which has pledged $72 million towards the offer to refinance most of ANZ's exposure to Evans & Tate.
The financier is also believed to be the architect of the proposal to merge the Nevada-registered Yarraman with Evans & Tate.
The takeover bid took many market watchers by surprise and raised questions over how a loss-making NSW winery could pull together a deal to buy Evan & Tate's $90 million debt to ANZ.
GE's involvement may go some way to assuring the doubters. GE, involved in Australia since 1902, is a diversified empire straddling health care, infrastructure, media and commercial finance.
It has been rapidly expanding in Australia since acquiring Coles Myer's credit card business in 1995. More recently it has sunk nearly $700 million into Perth commercial property.
GE would not comment on Friday but it is understood the financier previously approached Evans & Tate offering to support a financial restructuring of the struggling business.
While it declined to confirm its involvement in the bid, a source close to the deal said GE saw opportunities to leverage the assets of the two winemakers or sell assets that were not needed.
However, the source said the immediate focus would be to consolidate the merged company's financial position and secure an appropriate mix of debt and equity. "Then [it would] ensure that the production processes are all in place correctly and that they have their contracts right with their growers, which have been a problem in the past," the source said.
Yarraman launched its bid for Evans & Tate last month, saying it had also arranged $38 million in equity to help support the bid.
Evans & Tate's board has been given until January 16 to respond to the proposal but Yarraman's management team has been busy promoting the deal this week.
It wants to expand the merged business, to be named New World Wine Estates, into a global winemaker with operations in Chile, Argentina, New Zealand and the US
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