Yarraman Winery Inc (Yarraman) is aware of an announcement by Evans & Tate (ASX: ETW) to the Australian Stock Exchange earlier today.
This announcement refers to the merger Yarraman has proposed with Evans & Tate by Scheme of Arrangement.
In response to this announcement Yarraman would like to make the following comment/s:
The Offer
The Yarraman offer made on 21 December 2006 does not bind the board of Evans & Tate. The board of Evans & Tate has today confirmed that it intends to fully consider and evaluate the offer and provide its view of the offer in due course.
The Evans & Tate board has neither approved nor dismissed the offer.
Yarraman welcomes this comment and the commitment by the Evans & Tate board to review the offer in a diligent and timely manner.
The board of Yarraman believes that at the completion of this review it will be determined that the offer from Yarraman Winery, Inc remains a very good offer for all Evans & Tate security holders and the merged combined company in the future.
Under the terns of the offer, Yarraman has requested a response to the proposal by Evans & Tate’s board by 16 January 2007.
Identity Of Yarraman Funding Source/s
Yarraman, through a major New York investment bank, have arranged the necessary equity and debt funds required to fund the acquisition of Evans & Tate and meet ongoing working capital and growth requirements.
This capital raising is conditional only upon satisfactory due diligence by Yarraman and its capital providers.
Details of this funding has been supplied to Evans & Tate in the offer document presented on 21 December 2006.
Under the terms of the Yarraman Offer Letter, the identities of the financing source/s will be disclosed confidentially to the Evans & Tate board within 14 days of acceptance of the offer by the Evans & Tate Board.
An important aspect of the financing is that funding is being provided on closing to:
• Fund the merger transaction and the financial re-structuring of Evans & Tate;
• Refinance the A$90m ANZ Bank debt (by way of A$70M cash and A$20M in second ranking, cumulative, convertible notes in Yarraman); and
• Provide the necessary working capital to fund the growth plans of the combined Evans & Tate/Yarraman business.
Trading of Yarraman Securities
Yarraman is publicly listed on the OTC in the United States of America.
Yarraman is a tightly held stock and there has been no trading in Yarraman securities since the company made the announcement that it would be embarking on a program to identify appropriate acquisition candidates in order to fulfill its plans to build a global premium wine group.
At this time the company also announced that it had reached agreement with a major New York investment bank who confirmed its commitment to assist Yarraman in the raising of necessary capital to fund this program and future working capital requirements.
At this time the company confirmed that Yarraman Estate Pty Ltd winery in the Hunter Valley would be its foundation asset.
The investors of Yarraman approved this growth/ acquisition strategy as they understood the plan and the opportunities that could potentially be realised through the implementation of this strategy.
As soon as practical after the ordinary shareholders, the preference shareholders (WinES) and the convertible note holders (notes) vote in favour of the proposed Schemes, Yarraman intends to make an application for admission of its shares onto a more senior exchange, being either the American Stock Exchange (AMEX) or the NASDAQ.
Simultaneously with this application Yarraman intends to apply for admission to the official list of ASX for official quotation of its scrip or CHESS depositary interests. The ability to trade Yarraman scrip or CDIs on ASX should provide both existing shareholders in Evans & Tate and Yarraman and new shareholders on completion, with a potentially more liquid market for trading in Australia.
Offer To Evans & Tate WInES Holders
Yarraman can confirm that in the event that a transaction is concluded with Evans & Tate such as that proposed by Yarraman, the holders of the WInES preference shares will receive two (2) Evans & Tate common shares for every one (1) WInES share.
Accordingly, under the current Yarraman offer, WInES shareholders will receive two (2) Yarraman shares for every nine (9) WInES shares held (2:9) whereas the Evans & Tate common shareholders receive one (1) Yarraman share for each nine (9) Evans & Tate common shares held (1:9).
Value of the transaction
Yarraman’s proposed offer, values Evans & Tate at approximately A$131 million, allowing for the:
• Consideration proposed for the acquisition of ordinary shares, preference shares (WinES), and convertible notes; and,
• Refinancing of the A$90m ANZ Bank debt (by way of A$70M cash and A$20M in second ranking, cumulative, convertible notes in Yarraman).
The proposed merged entity would have an approximate market capitalisation of A$100 million.
Yarraman Management team
Yarraman has assembled a strong management team with significant experience in the global premium wine industry, including:
Wayne Rockall (Chief Executive Officer)
Yarraman Chief Executive Officer, Wayne Rockall joined the company in September 2006. He has considerable experience in sales and finance, as well as mergers and acquisitions and their subsequent integration. He was most recently sales director for Swift + Moore Pty Ltd, a Brown-Forman/Allied Domecq World Wines joint venture with annual sales of A$250 million during 2005. He was previously Commercial Director for Diageo Australia, where he was responsible for exports to Europe, the UK, the US and the Pacific Islands.
Brian Johnston (Director)
Yarraman Director, Brian Johnston joined the company during 2006, after more than 20 years of operational experience with Seppelt Wines, Southcorp and Allied Domecq World Wines. Mr Johnston served as acting Chief Executive Officer for Southcorp Wines before the company merged with Rosemount Wines. He was subsequently appointed Chief Executive Officer of Montana Wines, New Zealand’s largest winery.
Freddie Choong (Managing Director – Asia)
Freddie Choong has held senior managerial positions with Penfolds, Seppelt Wines, Southcorp Wines and Allied Domecq World Wines. London School of Economics-educated, Mr Choong has a reputation in and outside of the Australian wine industry as an authority on the Asian wine market. The merged entity will benefit from Mr Choong’s extensive marketing and distribution contacts to develop a strong presence in the Asia.
Warrick Duthy (Executive Director)
Yarraman Director, Warrick Duthy has been advising Yarraman throughout 2006 on growth and acquisition strategies and will join the board post-acquisition. He has 25 years experience in the industry, most recently as Global Business Development Director for Allied Domecq World Wines, with responsibility for strategy, marketing, mergers and acquisitions. He was previously Chief Executive Officer of Seppelt Wines, Diageo, Petaluma Wine Group and served as Marketing Director for Southcorp.
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