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Accolade walks away from merger talks

By Tuesday 28 May 2024No Comments

Accolade Wines has walked away from merger talks with the debt-laden Australian Vintage Limited (AVG).

“As previously announced on 26 February 2024, AVG had entered into preliminary discussions with Accolade Wines (Accolade) in relation to a potential merger, and had undertaken preliminary two-way due diligence, which was largely completed by mid-April 2024,” company secretary Alicia Morris said in an announcement to the ASX.

“Since the completion of the initial due diligence period, both AVG and Accolade had been engaged with respect to commercial terms and process for more detailed and substantive diligence.

“On the evening of 22 May 2024, AVG received correspondence from Accolade, via its advisors, that Accolade and its senior lenders were ‘not in a position to continue discussions further at this time’.

“While Accolade’s advisors declined to provide any further detail, AVG notes that this guidance was received shortly after the CCW Co-operative Limited (CCW) Annual General Meeting (AGM), which was held on 21 May 2024, and which voted down a special resolution to restructure Accolade’s largest grape supply contract, the Preferred Supply Agreement.”

Australian Vintage went into a trading halt on Thursday 23 May.

In the latest announcement to the ASX, Australian Vintage says its net debt is expected to be in the order of $70-$75 million as 30 June 2024.

“Compared to prior management expectations and guidance to the market of $43-$50 million,” AVG said.

“In addition, $15 million of existing bank capacity is due to expire at the end of July 2024, reducing Australian Vintage’s bank capacity, including overdraft facilities, to approximately $78 million.

“Given expected working capital requirements in Q1 FY25, Australian Vintage believes that commencing trading would be materially prejudicial to its ability to source additional capital which is critical to support its continued financial viability and operations.”

AVG has requested that voluntary suspension be applied to its ordinary shares.

The company requests that the suspension continue until such time as it releases an announcement to the ASX in relation to its proposed capital raising, debt refinancing and trading update, which is expected to be on or around 11 June 2024.

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