Australian Vintage says it believes “sector consolidation is logical” and it is “ready to participate” after Accolade Wines walked away from three months of merger talks. AV has also launched a heavily discounted capital raise as it looks to reduce debt and rebuild its balance sheet.
The company told the ASX it is “executing a comprehensive capital structure reset, including an Equity Raising and Debt Facility Increase and Extension (Capital Structure Initiatives)”.
Acting CEO, Peter Perrin, said, “The capital structures initiatives announced today are designed to provide more adequate levels of liquidity and financial flexibility to navigate the volatile conditions and enable the business to capitalise on future opportunities, including potential consolidation.”
The equity raise has shares priced at 20 cents per share, a 42 per cent discount on its last close on 22 May of 34.5 cents. The raise is not underwritten and there’s no guarantee it will be fully subscribed, Perrin said.
It will consist of $5.5 million institutional placement, $9.5 million two-for-seven accelerated, non-renounceable entitlement offer for institutional investors, and $4.9 million two-for-seven non-renounceable entitlement offer for retail shareholders.
The company also announced it expects to record a $38 million impairment charge against good will in FY24.
In a trading update, Australian Vintage said it expects FY24 sales to be in the range of $257-261 million, which was in line with FY23 but lower than internal expectations.
Absent of the equity raise, the company’s net debt will be in the range of $70-75 million, higher than the $43-50 million previously expected.
It told the market that it had in principle terms agreed with its existing financier – NAB – for up to $30 million of incremental debt capacity out to November 2026.
“We are grateful for the support of shareholders and our financier NAB and are committed to the disciplined execution of our strategic plan,” Perrin said.
Australian Vintage also announced chair, Richard Davis, would be standing down after the equity raise, at which time John Davies will be appointed interim chair. Non-executive director, Naseema Sparks, won’t be seeking re-election at the AGM and the company said it was in discussions with a possible replacement.
