27/07/2007 - 16:53

McWilliam's joins Pendulum to win E&T

27/07/2007 - 16:53

Bookmark

Upgrade your subscription to use this feature.

Evans & Tate has signed a binding agreement with ANZ Bank and Pendulum Capital Pty Ltd that will see east coast wine player McWilliam's Wines Pty Ltd take an equity position in the Margaret River winery.

McWilliam's joins Pendulum to win E&T

Evans & Tate has signed a binding agreement with ANZ Bank and Pendulum Capital Pty Ltd that will see east coast wine player McWilliam's Wines Pty Ltd take an equity position in the Margaret River winery.

E&T's announcement comes just hours after it rejected a merger proposal by Yarraman Estates Pty Ltd.

E&T said the revised restructure plan agreed to today sees ANZ and Pendulum reduce their intended overall holding from about 62 per cent to 48 per cent while McWilliam's will pick up a 25 per cent stake.

E&T said the deal would eliminate $112 million of debt and inject about $21.6 million into the business.

Under the deal ANZ will convert $50 million of E&T's debt into shares at 8 cents each and will house its shareholding alongside Pendulum's in Australian Wine Finance Corporation Pty Ltd.

McWilliams will be issued 102.66 million shares as well as receiving an additional placement of 100 million E&T shares at 4 cents each with 50 million free attaching options exercisable at 6 cents per share following a $17.6 million one-for-two rights issue at 4 cents a share.

In a statement this afternoon E&T said Pendulum had secured McWilliam's as a co-investor and global distributor of E&T's core products.

The balance sheet restructure is subject to approval by E&T security holders.

E&T chairman John Hopkins said the ANZ, Pendulum and McWilliam's restructure proposal was superior to any other proposal made to the company while the cash made available was similarly superior.

 

A copy of E&T's announcement is below:

Evans & Tate (ETW) today announced the signing of a legally binding agreement
(Agreement) for the financial restructure of ETW (Restructure Plan) and provides for entry
into a global distribution arrangement with McWilliam's Wines Pty Limited (McWilliam's).
The Restructure Plan contains terms which vary from the ANZ Banking Group Limited (ANZ)
and Pendulum Capital Pty Limited (Pendulum) proposal announced by ETW on 18 June
2007. Importantly, Pendulum has successfully introduced McWilliam's as a co-investor and
global distributor of ETW's core products comprising the Evans & Tate Reserve and
Margaret River-branded products, Evans & Tate Classic, Gnangara and X&Y ranges.
A summary of McWilliam's credentials is set out below.


Under the Restructure Plan the following has been agreed:

ANZ, which has also entered into a binding co-investor agreement with Pendulum, will
retain a core secured debt facility of $55 million and convert $50 million of debt and
interest to fully paid ordinary shares in ETW (Shares) at a conversion price of 8 cents
per Share. Of the total 625 million Shares to be issued to ANZ, 102.66 million will be
transferred to McWilliam's and the balance held equally by ANZ and Pendulum in their
own right or through a special-purpose vehicle, Australian Wine Finance Corporation
Pty Limited.

ANZ will waive the fee previously proposed of $2.25 million for introducing a
co-investor to ETW and write off interest and other fees owing to it (estimated at
approximately $12 million).

A scheme of arrangement is proposed under which ETW Convertible Noteholders and
WInES (redeemable preference shareholders) will convert their holding into Shares.
The Convertible Noteholders will receive 100 million Shares (previously 83 million) and
WInES holders will receive 62.3 million Shares.

4 All ETW shareholders (post the capital restructure) will then be entitled to participate in
a fully underwritten non-renounceable entitlements issue (Entitlements Issue) to raise
approximately $17.6 million at 4 cents per Share on a 1 for 2 basis, based on the
restructured equity base of ETW. For every two new Shares subscribed for the holder
will be entitled to one free five-year option to acquire one additional Share exercisable
at 6 cents per Share. The Entitlements Issue will be wholly underwritten by ANZ and
Pendulum, with ANZ and Pendulum each committed to taking up 80.585 million Shares
and McWilliam's taking a firm allocation of 151.33 million Shares.
5 Immediately following the Entitlements Issue, ETW will make a placement of
100 million Shares to McWilliam's at 4 cents per Share with 50 million free attaching
options exercisable at 6 cents per Share. The placement to McWilliam's is on the
same terms as the Entitlements Issue. The effect being that McWilliam's will contribute
a total of $10 million in new equity into ETW.
6 Following the Entitlements Issue and placement a share consolidation is proposed.
Subject to approval of the various ETW security holders and court approvals, the balance
sheet of ETW will be improved by the elimination of approximately $112 million of debt and
an injection of new cash of approximately $21.6 million.
Under the Restructure Plan, ANZ and Pendulum have agreed to reduce their overall
shareholding from approximately 62% to 48%, while McWilliam's will hold an approximate
25% shareholding, and the balance will be held by existing ETW security holders.
The proceeds of the Entitlements Issue and placement will be used for working capital in
developing ETW's business and meeting the costs relating to the Restructure Plan.
The transaction is subject to final due diligence and formal transaction documentation.
There are also certain conditions precedent to the transaction being finalised including the
various security holders and court approvals.
The parties anticipate that the transaction will be completed by the end of October.
It is intended that the McWilliam's global distribution arrangements will commence on
completion of the capital restructure, and that the terms of the distribution agreement will be
concluded in the course of finalising the transaction.
The Agreement includes a break fee which is payable by ETW if it:
"breaches any of its obligations in the Agreement, fails to enter into the Transaction
Documents or any director of ETW (that does not have a conflict of interest) does not
recommend or withdraws any recommendation supporting the Restructure Plan. The break
fee is an amount of $250,000 to each of ANZ, Pendulum and McWilliams and represents a
reimbursement of costs."
The Chairman of ETW, Mr John Hopkins, welcomed the signing of the Agreement between
ETW, ANZ, Pendulum and McWilliam's and said: "The Board is extremely pleased with this
revised Restructure Plan. The net debt in ETW resulting from the ANZ and Pendulum

proposal was superior to any other proposal made to the Company and the cash available is
similarly superior. We have secured a strongly improved balance sheet with lower debt and
cash reserves to grow the business, along with a new major shareholder, McWilliam's, which
is an outstanding performer in all areas of the wine industry."
"The transaction is the culmination of two years of support and input by ANZ and the ETW
Board to achieve a positive outcome for all ETW stakeholders", he said.
ETW's Chief Executive Officer, Martin Johnson, added: "These arrangements with
McWilliam's will enhance value for all stakeholders through concentrated focus on production
savings, quality and distribution efficiencies. Opportunities have already been identified to
effect cost savings within ETW and will be implemented when the conditions attaching to the
Agreement are fulfilled. We firmly believe that this proposed transaction gives ETW
stakeholders far greater potential to see value return to their ETW Shares."
Pending the various security holder meetings, court approvals and conditions precedent,
ANZ has reaffirmed its current intention to continue with its financial support to ETW.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options