Darrel Jarvis remains a believer in the Palandri wine business which he has sought to resuscitate with Chinese backing, blaming the high gearing levels created by the group’s finance division for its collapse.
Darrel Jarvis remains a believer in the Palandri wine business which he has sought to resuscitate with Chinese backing, blaming the high gearing levels created by the group’s finance division for its collapse.
Mr Jarvis has played in integral role in orchestrating a $30 million buyout with the help of Chinese steel magnate Xibo Ma that will pay out the secured creditors of the Palandri Wine Group, albeit at great personal cost, including the sale of his home.
Administrator Gary Doran of Deloitte said a minimum of $1 million will also be available for distribution to unsecured creditors if the deal is signed off.
Mr Doran could not quantify the unsecured debts – which speculation has put as high as $25 million – including numerous suppliers to the wine business such as bottling plants, labelling and harvest services.
The secured creditors are largely linked to Palandri Finance Ltd, including one lender which was understood to have a personal guarantee from Mr Jarvis.
Mr Jarvis said the Palandri Finance business, which borrowed money and then lent it to investors in the companies Managed Investment Schemes, was the undoing of his decade-old group.
“That is the Achilles’ heel of these MIS,” Mr Jarvis said.
He said Palandri’s finance operations were not big enough to generate scale of their own and yet brought a high level of debt to the group.
“It is hard to get a critical mass,” Mr Jarvis said.
“It’s the structure of the book, it is not bank triple-A rated.
“Finance companies are highly geared, that goes across the company.”
While stating that it was too early for a full debrief, Mr Jarvis said he remained a believer in the wine company which has been controversial for much of its 10 years, considering that it had a future beyond the current administration.
“I would not be doing it otherwise,” he said of the buyout.
Apart from selling his house, Mr Jarvis is understood to have raised a further $1 million to contribute directly to the buyout, as well as losing his existing equity, relinquishing his own Palandri MIS interests and a $2 million secured loan.
The former Palandri executive chairman, who will become a non-executive director of Mr Xibo’s buyout vehicle Global Wine Holdings Pty Ltd, did not wish to discuss the personal cost of the group’s collapse or the pressures he faced while bringing the deal to fruition.
The agreement, in the form of a deed of company arrangement which has to be ratified by creditors, was understood to be at least $4 million better than the next best offer, reflecting the contribution of Mr Jarvis and other directors who faced the prospect of legal action if Palandri went into liquidation.
Other directors of various group companies that are believed to have waived their rights as secured creditors or made some other contributions to the deal are: Chris Brown; former CEO Gordon Gran; John Ratcliffe of the UK, NSW-based Maria Cheer; South Australian Robin Day; and Victorian Geoffrey Green.
