Vintage Wine Estates Inc., a Santa Rosa-anchored producer of Ace Cider and wine brands B.R. Cohn, Girard, Clos Pegase and Viansa, on Wednesday announced it has filed for Chapter 11 reorganization as it has increasingly struggled in recent months to pay debts.
The filings in Bankruptcy Court are intended to “establish a fair, structured process for VWE to address outstanding debt obligations while the business pursues the sale of its assets,“ the company said in the news release. Vintage is looking for the ”sale of all or substantially all“ of its assets.
The company said it “experienced negative financial headwinds that severely impacted its liquidity position. In response, the Company explored several solutions to overcome these challenges, with the monetization of all assets being the most viable path forward to maximize value.”
The latest to be sold to pay down debt is Napa Valley’s Cosentino Winery at 7415 St. Helena Highway Yountville. The real estate and equipment for the Napa Valley facility were sold to Gene Wines LLC on Friday for $10.5 million.
As of March 31, the company had about $475 million in assets and $400 million in liabilities, according to a court filing by Seth Kaufman, CEO.
Chief among those liabilities was around $310 million Vintage still owed on secured lines of credit from BMO Bank at the time of the Chapter 11 filings, Kaufman said. His 45-page document recounted the company’s rapid growth through acquisition in recent years, impact of the pandemic on the wine business overall and Vintage’s restructuring strategy put into place in early 2023.
The company in late 2022 had obtained commitments for $458 million in credit lines from Bank of the West, which BMO acquired. But some of those commitments were reduced by $83 million in October of last year after four changes that gave Vintage more time to provide financial records and other information required.
Last September, Vintage brought in investment banker Oppenheimer & Co. to explore takers on three options: find a buyer for all or most of the assets, find an investor for a minority stake or sell individual brands or assets.
When that wasn’t successful, Vintage in January of this year ratcheted up its restructuring plan, including layoffs of 15% more workers on top of the 4% job cuts six months earlier. The company also committed to focusing on “super premium-plus” estate wineries such as Girard, Kunde, B.R. Cohn, Laetitia and Firesteed.
Former executive Karla Reed on Wednesday reflected on the news of the Chapter 11 filing. Reed, now co-founder of boutique Sebastopol vintner Wild Rising Wines, had been working for the company and its predecessor from 2010 until rounds of layoffs early last year. For the last four years, Reed was vice president of finished goods supply chain.
“It’s a sad day for Vintage Wine Estate employees who have worked so hard over the years to build a strong company and see it fall,” Reed told The Press Democrat.
This past March, Vintage brought in GLC Advisors and GLC Securities to find who might bid on company assets before or after a filing for reorganization, Kaufman said in the document.
“Quickly, however, it became apparent that the Company was unlikely to succeed in monetizing the majority of these assets through an out-of-court process, although it was able to close the sale of its Cosentino assets prepetition,“ Kaufman said.
Vintage’s challenges with liquidity continued this year. In February, the company entered the first of multiple forbearance agreements with its lenders that extended payment deadlines, waived previous breaches in requirements to submit financial documents, adjusted interest rates and reduced the credit line by $20 million.
The most recent forbearance agreement was set to expire this Wednesday, July 25. Last Thursday, July 18, the credit agreement was amended for a fifth time, with an advance of $7.5 million.
Vintage also filed with the Securities & Exchange Commission to delist its stock, traded on the Nasdaq exchange under the ticker symbols VWE and VWEWW.
The Vintage Wine Estates portfolio has over 30 wine, spirits and cider brands including luxury and “lifestyle” wines. The company owns and leases about 1,850 acres of vineyards and operates 11 wineries and nine tasting rooms, according to court documents. It employs more than 400 employees in 15 states.
Jeff Quackenbush covers wine, construction and real estate. Reach him at jquackenbush@busjrnl.com or 707-521-4256.
Press Democrat wine writer Peg Melnik contributed to this report.
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