McWilliam’s Wines closes in on sale, second time around

For McWilliam’s, a second time on the auction block is looking more promising for the collapsed wine group.

Andrew Higgins, chief winemaker at McWilliam's.

Administrators of collapsed wine group McWilliam’s have confirmed they’re in talks with a party interested in taking over the 143-year-old company.

In a letter to creditors, seen by The Australian, administrators Gayle Dickerson, Tim Mableson and Ryan Eagle of KPMG said they have entered exclusive talks with an interested party - two months after McWilliam’s previous favoured suitor failed to come up with the $46m needed to seal the deal.

“We have now considered and negotiated the multiple offers received,” the trio said in the letter.

“On February 9, 2021, the deed administrators agreed commercial terms with an interested party for a sale of the business as a going concern and have granted that party an exclusivity period to Monday, February 15, 2021 to finalise sale contracts. Further details will be provided when is commercially, and legally, possible to do so.”

But creditors will need to vote to put McWilliam’s into liquidation as part of the proposed sale, which they are set to vote on at a meeting scheduled for next Tuesday. The liquidation relates to the legal entity of McWilliam’s but not the business of that legal entity, meaning it can continue to trade until a sale is finalised.

“The trading and operations of the business will continue on a business as usual basis,” the administrators said.

“As a matter of process, creditors will need to resolve to...place the group into

liquidation. Accordingly, our recommendation is that each entity of the group be placed into liquidation ... and we can proceed to complete the proposed transaction.

“As referenced above, we reaffirm that there will be no impact to the ongoing trading and operation of the business during the period to completion of the sale. the liquidators will be personally liable for any debts incurred in the operation of the business.”

In December, Ms Dickerson assured creditors she would continue to maintain all financial commitments for the company, committing to producing the 2021 vintage to offer some certainty for the heritage wine group and its employees.

Ms Dickerson and her co-administrators ditched last favoured bidder, private equity and venture capital firm Prcstnt (pronounced “persistent”) who was also overwhelmingly backed by creditors after it failed to come up with the $46m needed to settle the deal.

Settlement was expected on November 27 but Prcstnt — chaired by Melbourne businessman Charles Hunting — asked for an extension not once but twice, surprising Ms Dickerson who said the firm had provided “unequivocal evidence” that it had enough cash to close the deal.

Ms Dickerson granted Prcstnt a second extension on the condition it provide a non-refundable amount of $500,000 and set December 9 as the deadline — the same day China’s Commerce Ministry imposed additional tariffs on Australia-imported wines, adding more levies after hefty anti-dumping duties applied last month.

McWilliam’s — known for its $13 flagons of sherry — collapsed in January after recording cumulative losses of close to $90m since FY15. The net asset position of the group reduced from $57.4m on June 30, 2018, to $31.3m on December 31 last year.

Prcstnt had hoped to make McWilliam’s, Australia’s sixth-biggest wine producer, its cornerstone investment. It launched its first fund in 2016 and now has $1bn under management, focusing on sustainability in the food, agriculture, energy, resources, technology and intelligence sectors.

It had agreed to pay $30m for the company and more than $16m for its stock, depending on a stocktake and valuation. The deal would have returned secured creditors 100c in the dollar, while unsecured creditors would have received 94c-100c in the dollar.