McWilliam’s Wines creditors overwhelmingly back private equity takeover

McWilliam’s Wines creditors unanimously voted in favour of a private equity takeover but the meeting wasn’t drama-free.

McWilliams’ sale has been overwhelmingly endorsed by creditors.

McWilliam’s Wines will plough ahead with its premiumisation strategy after creditors voted overwhelmingly in favour of selling the 141-year-old family-owned company to a four-year-old private equity group.

Prcstnt — pronounced persistent — is set for a full takeover of McWilliam’s in early October, after it rescued it from administration in a deal worth more than $46m.

Although creditors raised no questions or concerns about the proposal, under which they will receive 94c-100c in the dollar, that did not mean there wasn’t any drama.

After the vote a fire alarm sounded, forcing those who had attended in person to walk down the 38 flights of stairs of Tower Three in Barangaroo. Fortunately, it turned out to be just a fire drill.

After descending the stairs, administrator Gayle Dickerson, of KPMG, told The Weekend Australian the creditors’ support — 99 per cent voted in favour of the Prcstnt deal — was “positive for the Australian wine sector as a whole”.

Co-administrator Tim Mableson agreed and said that while the sector had been challenged with exports, McWilliam’s — known for its $13 flagons of sherry — had been a main beneficiary of the COVID-19 lockdowns.

“The wine industry is fundamentally healthy. It’s clearly going through some challenges, like any other sector at the moment during COVID-19, but ultimately where the industry has suffered has been in respect to its export markets,” Mr Mableson said.

“The positive is, those businesses like McWilliam’s that have strong brands, heritage and good positions in retail domestic markets have been able to rely on home consumption during COVID-19 being a real shot in the arm for them.”

McWilliam’s entered into voluntary administration in early 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.

McWilliam’s chief executive David Pitt, who will stay on at the request of Prcstnt, said emerging from administration delivered the company certainty and allowed it continue its premiumisation strategy, which it embarked upon about a year ago.

“Certainly there is a focus on continuing the premiumisation of the McWilliam’s brand, which we certainly have started and is certainly well underway,” Mr Pitt said.

“One of the biggest challenges, which the new owner is very comfortable in assisting with, is capacity utilisation of our wine assets. We have significant wine capacity available, and certainly getting that capacity utilised is a big ticket to the game in terms of profitability.

“And there is the opportunity to look at our portfolio and bring in further brands through acquisition and distribution agreements.”

Prcstnt is a global private equity and venture capital firm focused on sustainability in the food, agriculture, energy, resources, technology and intelligence sectors. Its first fund was launched in 2016 and it now has $1bn under management.

Executive chairman Charles Hunting said: “While it is critical that McWilliam’s is moved out of administration and returned to profitability in the immediate term, over the medium to longer term we will look to inject further capital to scale the business in both domestic and international markets, while driving environmental outcomes in line with our philosophy”.

Under the deed of company arrangement proposal from Prcstnt, priority employees and secured creditors will receive 100c in the dollar, while unsecured creditors will receive 94c-100c in the dollar.