Accolade Wines reaches recapitalisation agreement

Robert Foye, CEO of Accolade Wines

Accolade Wines announced today that it has reached agreement with lenders on a recapitalisation plan that will “significantly strengthen” its financial position and support the company’s success in key markets.

Under the terms of the recapitalisation plan, Australian Wine Holdco Limited (AWL), which is a group of institutional investors, will take equity ownership of Accolade, resulting in a change of control from existing shareholders.

AWL comprises funds backed by existing Accolade financial partners Bain Capital Special Situations, Intermediate Capital Group, Capital Four, Sona Asset Management and Samuel Terry Asset Management.

Accolade has experienced acute operating and financial conditions, driven by numerous economic factors including a structural downturn in wine demand, cost inflation, excess grape supply given historical arrangements, and elevated debt levels.

AWL described the agreement as “an important first step in a process to stabilise the business.”

The recapitalisation plan, which is expected to be completed by mid-year, will result in a substantial reduction in Accolade’s total senior interest-bearing debt. A corresponding reduction in annual interest expense and additional funding from each of AWL’s investors will provide greater operational flexibility to invest in the growth of the business for the benefit of all stakeholders.

The recapitalisation plan will not result in any immediate changes to Accolade’s operations, employee numbers or relationships with customers and suppliers.

Accolade Wines CEO Robert Foye said that the agreement was positive news for the business and their community.

“Like all Australian winemakers, we have been hit by a number of challenging macro-economic and industry headwinds in recent years. Despite our strong stable of brands and leadership positions in key markets, as well as operational measures taken to strengthen the business, our ability to respond to these challenges and grow has been hampered by an unsustainable balance sheet. With this recapitalisation and the support of our new shareholders, we will be ideally positioned to take advantage of the significant opportunities to meet customer demand and grow sales around the world.”

A spokesperson for AWL said that the restructure aimed to secure the future of the business.

“Accolade Wines has a long, proud Australian history as a worldclass wine producer and we hope it will remain so for many decades to come. We hope this restructure will build a more secure long-term future of the business. We will be working with and supporting Accolade’s management to focus on operations and stakeholders.

“We recognise Accolade’s South Australian operations will be crucial to the success of the company and understand the important role the company plays in the local grape growing industry, and the broader South Australian economy. We are committed to working with Accolade’s business partners of growers and customers to ensure a sustainable business.”

The transaction is subject to certain closing conditions and customary regulatory approvals. The AWL said the recapitalisation plan is targeted to be implemented by mid-year, “allowing time for regulatory approvals, satisfaction of other conditions, and implementation of new procurement arrangements with certain key suppliers.”

Renegotiations with those suppliers are underway, led by Accolade’s management team, and “good progress” has been made to date by all parties.

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