Avenue Vine

Yarraman Winery Inc's principal operating asset is the Yarraman Winery in New South Wales' Hunter Valley.

But Yarraman Winery Inc's proposal was terminated in March after the Evans & Tate board said it was not satisfied Yarraman Winery Inc had secured sufficient debt and equity to complete the proposed transaction.

Evans & Tate noted that Yarraman Estate Pty Ltd was a different legal entity than that which had previously made offers.

Evans & Tate also said that any consideration of a new offer would include a request for "firm evidence" of funding of the proposal.

Yarraman has arranged for GE Finance to fund the new proposal.

Under the plan, Yarraman proposes Evans & Tate acquire Yarraman - which has an estimated net worth of $17 million - at a yet-to-be-determined price to be paid by issuing Evans & Tate shares at 11 cents each.

Under the proposal, Evans & Tate's $100 million debt to ANZ Banking Group Ltd, which is the winemaker's major creditor, will be settled with a $65 million cash payment and $20 million in Evans & Tate shares issued at 11 cents each.

Convertible note holders and Wine Income Exchange Securities (WInES) holders would be asked to convert their securities into ordinary shares, at a rate of one convertible note to seven shares, and one WInES to 2.4 shares.

After the merger, there would be an underwritten renounceable one-for-1.6 rights issue to all shareholders to raise $20 million at five cents per share.

The proceeds of the capital raising would be used to pay $10 million of the $65 million cash payment to the ANZ, to repay an existing debt facility of Yarraman of $5.5 million, and to pay the costs of the merger and further retirement of the merged entity's debt.

Under the rights issue, one free attaching option, exercisable at 7.5 cents within five years, would be granted for every two rights shares subscribed for.

Yarraman said it had arranged for GE to provide a debt finance package to the merged entity of $72 million, with $53.5 million going as part payment to the ANZ bank and $18.5 million going towards working capital.

Yarraman and ANZ would hold all of their Evans & Tate shares in escrow for one year.

Evans & Tate said the new Yarraman offer was still subject to due diligence.

The Evans & Tate board would meet to consider the offer.

Meanwhile Evans & Tate said it had been notified that unlisted West Australian wine firm Ferngrove Vineyards had withdrawn its proposal for a merger with between Evans & Tate.

Ferngrove made the proposal in June.

The Ferngrove offer came soon after Evans & Tate reached an in-principle restructuring agreement with the ANZ and Pendulum Capital Pty Ltd, a financial services company linked to entrepreneur and winemaker Peter Fogarty.

The Pendulum proposal followed the scrapping of an earlier restructuring agreement struck in May between Evans & Tate and the ANZ bank. That proposal was dumped after the ANZ bank was unable to find a co-investor to participate in the restructure of Evans & Tate.

Under the Pendulum plan, there would be a $45 million placement of shares to ANZ, reducing Evans & Tate's debt to the ANZ to about $55 million. ANZ would sell half of the shares to Pendulum.

Evans & Tate would also undertake a non-renounceable rights issue to raise $16.7 million, at five cents per share.

Convertible notes and WInES would be converted into ordinary shares at a rate of one convertible note for 4.18 shares and one WInES for two shares.

Evans & Tate shares were steady at 15 cents on Wednesday.

Source: “Evans & Tate receives merger proposal,” The Age, July 25, 2007

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