Just as the hour was getting close to midnight, a white knight appears to have provided a lifeline for struggling WA-based winemaker, Evans & Tate. The ANZ Bank, which is owed around $100 million by the company, had previously been frustrated in its inability to court a suitor to act as a third party to take a major equity stake in the business. In turn, this offer has been met by a counter from the owners of premium Frankland River producer, Ferngrove. Pendulum Investor Group, an investment vehicle co-owned by former ERG chief executive and successful wine entrepreneur Peter Fogarty and Max Fowles, as a cornerstone investor agreed to purchase half of an issue of 429.5 million E&T shares (representing 64.2% of the company) issued to the ANZ for an undisclosed sum, which will in turn reduce the company’s debt to the bank by $45 million. Pendulum says it’s in for the long haul and has no plans to change the company’s management structure. This is good news for Evans & Tate, for Peter Fogarty’s Fogarty Wine Group owns Millbrook in the Perth Hills, Lakes Folly in the Hunter Valley and Deep Woods Estate at Margaret River. Fogarty has extensive experience as an owner and manager of wine assets, but has ruled out merging his other winery interests with E&T. E&T security holders will vote on the issue of shares to the ANZ after a due diligence period of 30 days, and the conversion of the winery’s convertible notes into ordinary shares at a ratio of 4.18 shares per note, as well as the conversion of convertible preference shares into ordinary shares at a ratio of two for one. In the event that all shareholders take up their entitlement in the subsequent 5c per share rights issue, ANZ and Pendulum will each have a 32.1 per cent equity stake in E&T, while current shareholders will have just 13.9 per cent. Convertible noteholders and preference shareholders will have 12.5 per cent and 9.3 per cent respectively, while E&T will continue to owe $55 million to the ANZ. A non-renounceable rights issue of $16.7 million at 5c per share will be fully underwritten by ANZ and Pendulum. This will provide Evans & Tate with working capital, and possibly, perhaps ambitiously, with funds for future acquisitions. The ANZ’s previous attempt to shore up the bank’s future only called for a non-underwritten capital raising of $5 million, which neither Fowles nor Fogarty believed would not provide the company with sufficient funds to remain afloat. Yarraman, the US-listed winery investment vehicle whose $148 million takeover proposal was knocked back by the E&T board earlier this year, also remains an interested observer of the company.
