Put a cork in it: winemaker Evans & Tate faces collapse Blair Speedy and Kevin Andrusiak June 09, 2007
EMBATTLED West Australian winemaker Evans & Tate is on the verge of collapse after its banker and biggest creditor ANZ failed to find a white knight to take a cornerstone stake in the loss-making company.
E&T shares went into a trading halt yesterday as industry sources suggested the company was headed for formal administration after last-minute negotiations between ANZ and E&T broke down.
ANZ is owed about $100 million, and on May 10 it agreed to help restructure the company's ailing balance sheet. The lender was to have converted $45 million of its debt into shares to take a 64 per cent stake in the company, which was seen as a last-ditch bid to keep the venerable WA firm alive.
E&T was to issue 430 million shares at 11c each and ANZ would then find a co-investor to take half of that, a task that proved too difficult because investors have been shy of buying into the struggling domestic wine industry. A Goldman Sachs private equity fund had walked away from that option only recently.
It is understood that ANZ tried to renegotiate terms of the restructure plan, but was knocked back by the E&T board.
An E&T source confirmed that ANZ had withdrawn its financial support but denied claims the company was set to be placed in administration.
An E&T spokesman said it would be inappropriate to comment while the company remained under trading halt. ANZ declined to comment about the bank's intentions for the company.
Deposed former chairman and biggest shareholder, Franklin Tate, could not be contacted for comment.
E&T's latest reported half-yearly accounts showed revenue was down 11.2 per cent to $39.4 million compared to the corresponding 2005 period and its loss after tax for the six months to the end of December was $6.7 million, down from $44.4 million as it switched focus to a premium wine strategy in a bid to drive revenue growth.
A spokesman for Yarraman, the US-based winery investment company whose $148 million takeover proposal was knocked back by the E&T board over concerns about the bidder's financial viability, said it was watching the process with interest.
Yarraman, which owns winery assets in NSW's Hunter Valley, is one of the few potential buyers for Evans & Tate's assets in the event of a liquidation, as the wine glut and subsequent drought have exhausted the financial reserves of most existing players in the wine sector.
Foster's, which is now Australia's largest wine group, is itself trying to sell off a number of poorly performing winery assets, while Lion Nathan's wine strategy is focused on high-quality branded products rather than the high-volume discount market from which E&T draws much of its revenue.
Evans and Tate shares were worth 15c before the trading halt.
