This Yarraman seems to be a non entity. They have no harvest for 2007 and cant even pay the loans which they currently have. Yet ETW would only have 20% of the combined group.
sold down to 21.5 this am. does not look good. Too many ifs and buts.
"Evans shares were steady at 23c yesterday after the company said the deal valued it at 17c a share, or $15.6 million, based on the subscription price of $US1.20 Yarraman has set for the issuing of $38 million worth of new shares to help finance the deal.
Although Yarraman generated only about 3 per cent of Evans' revenues last fiscal year, the merger would see Evans shareholders end up with around 20 per cent of the combined group. Under the offer they will get one Yarraman share for nine of their Evans shares.
Yarraman declined to disclose which "large multinational financier" it says has made a commitment to provide a $72 million loan to help fund the offer. Under the proposed deal, Yarraman plans to pay Evans's largest creditor - ANZ Bank - $90 million in cash and $20 million in "second rating" Yarraman convertible notes.
Yarraman chief executive Wayne Rockall yesterday played down concerns his company was already falling behind in its debt repayments. In a filing to the US Securities and Exchange Commission early this year, Yarraman conceded there were "substantial" concerns about its ability to continue as a going concern.
"The company has suffered recurring losses from operations, cash deficiencies and the inability to meets its maturing obligations without borrowing from related parties and sale of its stock," the company said.
Mr Rockall said Yarraman had extended by 12 months a $5.5 million loan - at 10 per cent a year interest - its SEC filing said was "due and payable on December 26". It is at risk of paying 16 per cent if it misses just one repayment.
"This is an organisation of great integrity," Mr Rockall said of Yarraman.
Mr Rockall said the lower offer for Evans shareholders reflected the performance of its shares "over a long period of time". Since listing at $1 each in 1999, Evans shares have traded between $1.68 in 2001 and 5c in May when the company came close to collapsing under its $100-odd million of debts.
As for Yarraman's plans not to crush any grapes in 2007 to help clear the glut in its cellars, and the meagre $2.3 million of wine sales it generated last year, Mr Rockall said: "The business may not be generating a lot of cash but the bankers are very supportive and understand what we are doing."
ETW Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
