25/07/2007 - 15:40

And then there were two: Ferngrove pulls out of race for E&T

25/07/2007 - 15:40

Bookmark

Save articles for future reference.

The field vying for the business of listed winemaker Evans & Tate Ltd has narrowed with the withdrawal of Jack Bendat-linked Frankland producer Ferngrove Vineyards Ltd following due diligence and just as rival Yarraman's new offer emerges in detail.

And then there were two: Ferngrove pulls out of race for E&T

The field vying for the business of listed winemaker Evans & Tate Ltd has narrowed with the withdrawal of Jack Bendat-linked Frankland producer Ferngrove Vineyards Ltd following due diligence and just as rival Yarraman's new offer emerges in detail.

The decision by Ferngrove, which appears to result directly from the due diligence process, leaves Peter Fogarty's Pendulum Capital Pty Ltd and Yarraman Pty Ltd, the Australian company of US-listed Yarraman Winery Inc as bidders for Evans & Tate.

"Ferngrove has identified matters of which we were unaware at the time of making our offer to the extent that the issues are not satisfactory for us to approve going forward to fulfil our strategy without seriously jeopardising our existing shareholders from their healthy current position," the company said in a statement.

Yarraman lodged a fresh bid yesterday in an effort to overcome problems with its rejected $148 million takeover proposal earlier this year, proposing this time that Evans and Tate acquire Yarraman, a business worth almost $17 million.

As part of the proposal, debts owed to ANZ bank by Evans & Tate would be paid out, via $65 million in cash and $20 million in Evans & Tate shares at an 11 cents issue price. Convertible note holders and WInES holders would convert their securities into ordinary shares.

The merger would be undertaken after a one for six rights issue to all shareholders to raise $20 million at 5 cents per share.

The proceeds of the capital raising would be used to further reduce the ANZ bank debt by $10 million, to repay an existing debt facility of Yarraman of $5.5 million, with the balance to be used to pay the costs of the merger and further retirement of the merged entity's debt.

Pendulum is proposing a $16.7 million rights issue at 5 cents a share.

 

Below are the Ferngrove and Yarraman statements:

After an intense 4 week period of due diligence review involving our independent advisers, our assessment is now complete. Ferngrove has identified matters of which we were unaware at the time of making our Offer to the extent that the issues are not satisfactory for us to approve going forward to fulfil our strategy without seriously jeopardising our existing shareholders from their healthy current position.

As of 25th July 2007, Ferngrove Vineyards Ltd has formally lodged notification with the Evan & Tate Ltd board of directors the Ferngrove "merger and balance sheet rescue offer" has been withdrawn.

It is the right decision for Ferngrove shareholders. Ferngrove will continue to move forward exploring responsible growth opportunities as we are long term, passionate, true wine business brand builders.

Ferngrove is a sizable Western Australian premium producer and continues to discuss with other parties its core goal of growing a truly Western Australian wine business that is profitable, operates in growth segments and delivers outstanding wine quality to its increasing consumer base within acceptable risk profiles.

Ferngrove will continue to pursue complementary brand fits and regional hero representation from areas along the South West Coast from Margaret River northwards and reignite discussions with other parties. Ferngrove is a serious, credible and respected wine business in WA, testament to the many 3rd party endorsements received and we will partner with the right company/people to achieve our goals, ultimately delivering the consumer some of this state's best wine at respectful value and not putting our company owners at unnecessary and unmanageable risk.

We wish Evans & Tate board and management, ANZ and the other 2 offers all the best in resolving the future for the E&T brand as soon as possible now, as we need to put confidence back into the industry.

 

Yarraman's offer is below:

Evans & Tate Limited (ETW) has this afternoon received an offer from Yarraman Estate Pty Ltd (Yarraman) for a merger of the 2 entities. ETW notes that Yarraman is a different legal entity than that which has previously
made offers in respect of ETW.

Yarraman proposes that ETW enters into a Heads of Agreement with it on the following principal terms:

- ETW will acquire Yarraman for a price to be determined by independent appraisal of Yarraman's business and assets, which is estimated to be $17million (net). The consideration for the acquisition will be the issue of ETW shares at 11 cents each;
- Convertible Noteholders and WInES Holders will be asked to convert their securities into ordinary shares:
- the conversion ratio applicable to Convertible Noteholders will be 1 Convertible Note to 7 ordinary shares;
- the conversion ratio applicable to WInES will be 1 WInES to 2.4 ordinary shares;
- the ANZ will be paid $65million in cash and $20million in ETW shares (at an issue price of 11 cents) in full and final settlement of ETWs indebtedness to the ANZ;
- immediately after merger, there will be an underwritten renounceable 1-for-1.6 rights issue to all shareholders (including newly converted shareholders) to raise $20 million at 5 cents per share. One free
attaching option (exercisable at 7.5 cents within 5 years) will be granted for every 2 rights shares subscribed for.
- the proceeds of the capital raising will be used to further reduce the ANZ bank debt by $10million, to repay an existing debt facility of Yarraman of $5.5million with the balance to be used for payment of the costs of the merger and further retirement of the merged entity's debt;
- Yarraman states that it has arranged for GE to provide a debt finance package to the merged entity in the amount of $72million to be applied as to $53.5million to part payment to the ANZ and the remaining $18.5million for a working capital facility;
- Each of Yarraman and ANZ will hold 100% of its ETW shares in escrow for 12 months.

The Yarraman Offer differs from the Restructure Agreement announced on 10 May 2007 (which was constituted by a binding heads of agreement with the Company's bank, ANZ, to restructure the Company's balance sheet as part of
its turnaround strategy) in the following respects:

- ANZ will not receive any placement fee or shares in lieu of a placement fee
- the conversion rates for the Convertible Notes and WInES have been increased
- the proposed share purchase plan will be replaced with a larger capital raising to be undertaken as a non-renounceable rights issue
- the businesses of ETW and Yarraman will merge.

The Yarraman offer is subject to satisfactory due diligence, the entry into a
binding Heads of Agreement and the approval from the various stakeholder
groups.

The above represents a broad summary of the key commercial terms of the
proposal received from Yarraman. The ETW board has not analysed,
recommended or accepted the proposal at this stage.

The Board of Evans & Tate and its advisors will meet to consider this offer
and compare it with the other offers received, which have been previously
announced. Any consideration will include requesting firm evidence of funding
of the offer by GE. The Company's bank, ANZ, will also need to consider the
Yarraman offer.

 

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options