Peter Fogarty's Pendulum Capital Pty Ltd has struck a deal with Evans & Tate Ltd's major lender, ANZ Banking Group, to restructure the winemaker's balance sheet and underwrite a $16.7 million non-renounceable rights issue.
Peter Fogarty's Pendulum Capital Pty Ltd has struck a deal with Evans & Tate Ltd's major lender, ANZ Banking Group, to restructure the winemaker's balance sheet and underwrite a $16.7 million non-renounceable rights issue.
The corporate advisory firm established by Mr Fogarty and former stockbroker Max Fowles in 2004 could fork out up to $19.3 million in return for about 40 per cent of the winemaker's issued capital.
Pendulum is representing an unamed investor group.
If the proposed restructure is completed, ANZ will emerge with about 22 per cent of E&T's issued capital in exchange for slashing E&T's debt by $45 million. But the bank could end up with a stake worth about 40 per cent if it is required to make up a shortfall in the proposed rights issue, which it is undewriting together with Pendulum.
The rights issue will offer existing E&T shareholders the opportunity to buy E&T shares at 5 cents each for every two shares they own.
The share price is more than half what ANZ and E&T had agreed to last month when they struck a memorandum of understanding for a balance restructure, which would have provided the bank with 409 million shares at 11 cents each.
The bank, which would have emerged with a 64 per cent stake in E&T, intended to sell half its shares to a third-party co-investor. It would have also retired $45 million of E&T's debt.
However, the deal came unstuck when ANZ failed to secure a co-investor and it subsequently terminated the heads of agreement.
Under the terms of the new deal E&T will issue 430 million shares to ANZ and the bank to sell half of those shares to Pendulum's investor group for an "undisclosed sum".
Based on Pendulum paying ANZ 5 cents per share and taking up half of the 334 million shares to be issued via the rights issue at 5 cents a share, the corporate advisory firm's investment would sit at about $19.3 million.
Mr Fowles said Pendulum had initiated talks with ANZ when it revealed its 11-cent-a -share restructure plan last month.
He said that state of E&T's balance sheet meant it not only needed to retire debt but it also needed to raise funds for working capital.
Mr Fowles said the rights issue was "appropriately priced to get shareholders to participate".
Shareholders that take up the offer will also get one free option for every two shares subscribed for. The options will have a five-year term and be exercisable at any time at 7.5 cents.
E&T said the proceeds of the rights issue will be used primarily for working capital, capital works and "possible other strategic acquisitions".
Mr Fogarty is in Europe on business but last week ruled out that he was looking to back his Forgarty Wine Group into a restructured E&T.
Fogarty Wine Group owns Hunter Valley winery Lakes Folly, Margaret River's Deep Woods Estate and Millbrook Winery in Jarrahdale.
In March, E&T closed the door on a $148 million takeover bid by US-listed Yarraman Winery Inc because it was not satisfied the company had secured the funding it needed to complete the transaction.
However, it has left the door open for new offers saying today that the board would "continue to examine all alternate offers for the restructure of the company."
WA Business News understands that Yarraman is putting together a fresh takeover offer for E&T.
If the Pendulum and ANZ restructure plan is successful E&T's debt to ANZ will be about $55 million.
Mr Fowles said Pendulum needed to complete due dilligence work, which he expected would take about three weeks.
ANZ shares returned to trading after a 10 day suspension. At 2pm its shares were 3 cents lower at 12 cents.
