Vintage Wine Estates Provides Update On Asset Sales As Company Progresses Towards Streamlined Business Model And Announces Forbearance Agreement With Lenders

Author: Benzinga Newsdesk | March 05, 2024 04:21pm

• Leadership accelerating efforts to streamline business model with focus on branded
  
  Super Premium+ wine and cider across wholesale and direct-to-consumer ("DTC") channels
  
  
  
   
• Measurable progress on monetization of non-core production services and stand-alone DTC platforms to support debt reduction
  
  
  
   
• Lenders aligned on turnaround and restructuring plan; forbearance agreement provides time for amendment discussions
  
  
  
   
• Planning to report second quarter fiscal 2024 results on March 12, 2024

Vintage Wine Estates, Inc. (NASDAQ:VWE) ("VWE" or the "Company"), one of the top wine producers in the U.S., today provided an update on the business to include its progress with restructuring and asset sales, discussions with its lenders and financial reporting timing expectations.

Streamlined business offers commercial/operational focus and improved financial profile, supported by divestment of high-cost operations

Seth Kaufman, President and CEO of Vintage Wine Estates, commented, "To reposition VWE as an omnichannel wine and cider company that offers the highest quality Super Premium+ products in the U.S., we are aggressively advancing on our top priorities to:

• improve profitability and build a strong go-to-market capability that supports differentiated brands,
• sell non-core assets to measurably reduce debt, and
• optimize operations to improve cash generation.

We are actively executing against our planned roadmap to engage potential acquirers for our stand-alone DTC and certain production services businesses, in addition to other assets. This will generate needed focus and allow us to strategically deploy our resources to support a unique branded wine and cider business which we believe can offer accelerated top-line growth, gains in market share, expanded margins, and improved cash generation. We anticipate that selling these non-core assets with unfavorable cost structures will materially reduce operating expenses and help transform VWE into a much smaller, but more profitable business, that can consistently generate cash. And, perhaps most importantly, these actions can allow us to return our focus to developing and scaling unique brands that delight consumers with highly-rated wines and ciders."

Sale of assets update

The Company retained Oppenheimer & Co. in January 2024 to aggressively pursue the sale of several assets and to date has received numerous attractive bids as well as a non-binding letter of intent. The Company believes it is well positioned to close certain of these transactions over the next few months. There is also an ongoing evaluation of interest in other assets, which could be opportunistically sold if offers exceed valuation and return hurdles.

Mr. Kaufmann noted, "The level of interest in our non-core businesses and other assets has exceeded our expectations in terms of the quantity and quality of discussions. We remain optimistic in our ability to monetize these assets, which will allow us to pay down debt and increase liquidity."

Forbearance agreement with lenders

The Company also announced that its plans to reorganize and dispose of certain assets through sales were accepted by its lender group. The lender group subsequently provided an agreement to forbear exercising their rights and remedies under the Second Amended and Restated Loan and Security Agreement as amended on October 12, 2023 (the "Second A&R Loan and Security Agreement"), in respect of, or arising out of, certain defaults under the Second A&R Loan and Security Agreement until the earlier of March 31, 2024 or in the event of any other event of default other than those designated in the agreement. The Second A&R Loan and Security Agreement currently has principal amounts outstanding of $324.3 million as of February 29, 2024. The forbearance agreement provides flexibility for the Company to continue executing the previously announced restructuring and transformation while working with its lenders on an amended credit agreement.

Kristina L. Johnston, Chief Financial Officer of VWE, commented, "Our lenders remain fully engaged with us and we appreciate the progress we are making with discussions to further amend our credit agreement to reflect our current business operations as we execute our restructuring roadmap and advance asset sales."

The Company will provide an update when further disclosure is required or otherwise appropriate.

Second quarter fiscal 2024 financial results timing

As previously announced, the Company has not yet filed its financial results for the period ended December 31, 2023. It expects to report these results and file its Form 10-Q on March 12, 2024.

Posted In: VWE