- Chapter 11 filing is intended to enable Company to address
debt obligations and pursue asset sales
- $60.5 million debtor-in-possession financing
- Sale of Cosentino real property and equipment with proceeds
of $10.5 million
Vintage Wine Estates, Inc. (Nasdaq: VWE and VWEWW) (the
“Company“) announced today that the Company and certain of its
subsidiaries (such subsidiaries, each a “Debtor,“ and together with
the Company, the “Debtors“) filed a voluntary petition for
reorganization (collectively, the “Chapter 11 Cases“) under chapter
11 of title 11 of the United States Code (the “Bankruptcy Code“) in
the United States Bankruptcy Court for the District of Delaware
(the “Bankruptcy Court“). This process is intended to establish a
fair, structured process for VWE to address outstanding debt
obligations while the business pursues the sale of its assets.
Over the preceding months, the Company 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.
In connection with the Chapter 11 Cases, the Company has filed
customary motions authorizing it to proceed with its operations in
the ordinary course. In addition, the Debtors have also filed a
motion seeking approval of certain procedures relating to the
marketing auction (if necessary) and sale of all or substantially
all of the Company's assets (the “Bidding Procedures Motion“). No
trustee has been appointed and each Debtor will continue to operate
its business as a “debtor-in-possession“ subject to the
jurisdiction of the Bankruptcy Court and in accordance with the
applicable provisions of the Bankruptcy Code and the orders of the
Bankruptcy Court.
Subject to approval of the Bankruptcy Court, the Company, as
borrower, intends to enter into a debtor-in-possession financing
facility (the “DIP Facility“) with the prepetition lenders under
the Credit Agreement (as defined below), pursuant to which the
lenders will make available to the Company a credit facility in the
amount of $60.5 million. The DIP Facility, along with the Company's
existing liquidity and cash generated from ongoing operations, will
be used to support the Company's business during the restructuring
process.
The filing of the Chapter 11 Cases constitutes an event of
default that accelerated the Company’s obligations under the Second
Amended and Restated Loan and Security Agreement with BMO Bank
N.A.(as amended from time to time, the “Credit Agreement“). As of
the petition date, the Company had an aggregate of approximately
$310 million in outstanding loans and commitments under the Credit
Agreement.
The Credit Agreement provides that as a result of the Chapter 11
Cases, and to the extent permitted by applicable law, all
outstanding amounts thereunder are automatically due and payable.
However, any efforts to enforce payment obligations under the
Credit Agreement are automatically stayed as a result of the filing
of the Chapter 11 Cases and the lenders’ rights of enforcement in
respect of the Credit Agreement are subject to the applicable
provisions of the Bankruptcy Code.
The decision to file for the voluntary petition for
reorganization under chapter 11 was made after a careful evaluation
of the Company's financial situation and a determination that it is
in the best interests of the Company and its stakeholders. The
Company expects commercial operations to continue largely
business-as-usual and is committed to serving a diverse range of
customers during the Chapter 11 Cases. For more information on the
chapter 11 cases, please read the Company’s Current Report on Form
8-K, to be filed with the U.S. Securities and Exchange Commission
(the “SEC“) today. The Company’s SEC filings are available publicly
on the SEC’s website at www.sec.gov.
For Bankruptcy Court filings and other additional information
related to the chapter 11 cases available from time to time, please
see https://dm.epiq11.com/VintageWine, a website administered by
Epiq Corporate Restructuring, LLC, the Company’s third-party
bankruptcy claims and noticing agent.
The Company also announced today its intention to voluntarily
delist its common stock and warrants from the Nasdaq Stock Market
LLC (“Nasdaq“) and deregister its common stock and warrants under
Section 12(b) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act“).
The Company’s board of directors made the decision to delist and
deregister the Company's securities following careful consideration
of the Company’s current situation, including filing of the
Company’s chapter 11 cases. In addition, the board of directors
determined that it is in the Company’s best interest to withdraw
the listing and registration to reduce the Company’s costs of
compliance with the rules of the SEC and Nasdaq. In addition, and
as previously disclosed, the Company has received a notification
from Nasdaq's Listing Qualifications Department dated September 13,
2023 indicating that the Company no longer satisfies Nasdaq Listing
Rule 5450(a)(1), which requires listed companies to maintain a
minimum bid price of at least $1 per share. As of the date of this
release, the Company has not regained compliance with such listing
rule.
The Company has notified Nasdaq of its intent to voluntarily
delist its common stock and warrants, and intends to file a notice
on Form 25 relating to such delisting with the SEC on or about
August 5, 2024. The Company expects the delisting of the common
stock and warrants to be effective on or about August 15, 2024.
Following such delisting, the Company intends to file a
Certification and Notice of Termination of Registration on Form 15
with the SEC on or about August 15, 2024, requesting the
termination of registration of the Company’s common stock and
warrants under Section 12(g) of the Exchange Act, if any, and the
suspension of the Company’s reporting obligations under Sections 13
and 15(d) of the Exchange Act.
The Company has not arranged for listing or registration of its
common stock or warrants on another national securities exchange or
for quotation in a quotation medium. Following delisting, the
common stock and warrants may be eligible to be quoted on the Pink
Open Market operated by the OTC Markets Group Inc. if a market
maker sponsors the security and complies with Rule 15c2-11 under
the Exchange Act, but the Company can provide no assurances that a
public market for trading the common stock and warrants will exist
now or in the future.
The Company is committed to working closely with its
stakeholders to minimize the impact of the bankruptcy process and
to ensure that its creditors are treated fairly. The Company has
engaged GLC Advisors & Co., LLC and GLC Securities, LLC to
advise on its strategic options, including the pursuit of the sale
of all or substantially all of the Company's assets as contemplated
by the Bidding Procedures Motion. The Company has received and is
currently evaluating multiple preliminary indications of interest
with respect to the potential sale of various of its assets. Any of
those sales would be subject to review and approval by the
Bankruptcy Court and compliance with Bankruptcy Court-approved
bidding procedures pursuant to the Bidding Procedures Motion or as
otherwise approved by the Bankruptcy Court. In addition, the
Company is consulting with Jones Day as legal advisors, Riveron
Consulting as financial advisors and Richards, Layton & Finger
as Delaware counsel.
The Company also announced that on July 19, 2024, the Company
completed the sale of Cosentino Winery's real property and
equipment to Gene Wines, LLC, a California limited liability
company, for cash proceeds of $10.5 million, subject to customary
pro rations and adjustments, that were used to pay down debt.
Cautionary Note Regarding the Company's Securities
The Company cautions that trading in the Company’s securities
during the pendency of the Chapter 11 Cases is highly speculative
and poses substantial risks. Trading prices for the Company’s
securities may bear little or no relationship to the actual
recovery, if any, by holders of the Company’s securities in the
Chapter 11 Cases. The Company expects that holders of the Company’s
securities, including common stock, could experience a significant
or complete loss on their investment, depending on the outcome of
the Chapter 11 Cases.
Forward-Looking Statements
This release contains “forward-looking statements“ within the
meaning of federal securities laws. Forward-looking statements are
all statements other than those of historical fact and may be
identified by the use of words such as “expect,“ “anticipate,“
“could,“ “should,“ “intend,“ “plan,“ “believe,“ “seek,“ “see,“
“may,“ “will,“ “would,“ or “target.“ Forward-looking statements are
based on management’s current expectations, beliefs, assumptions
and estimates and may include, for example, statements regarding
the Chapter 11 Cases, the Debtors’ ability to consummate and
complete a plan of reorganization and their ability to continue
operating in the ordinary course while the Chapter 11 Cases are
pending. These statements are subject to significant risks,
uncertainties, and assumptions that are difficult to predict and
could cause actual results to differ materially and adversely from
those expressed or implied in the forward-looking statements,
including risks and uncertainties regarding the Debtors’ ability to
successfully complete a restructuring under Chapter 11, including:
consummation of a plan of reorganization; potential adverse effects
of the Chapter 11 Cases on the Company’s liquidity and results of
operations; the Debtors’ ability to obtain timely approval by the
Bankruptcy Court with respect to the motions filed in the Chapter
11 Cases; objections to any plan of reorganization or other
pleadings filed that could protract the Chapter 11 Cases; employee
attrition and the Company’s ability to retain senior management and
other key personnel due to distractions and uncertainties resulting
from the Chapter 11 Cases; the Company’s ability to maintain
relationships with suppliers, customers, employees and other third
parties and regulatory authorities as a result of the Chapter 11
Cases; the effects of the Chapter 11 Cases on the Company and on
the interests of various constituents, including holders of the
Company’s common stock; the Bankruptcy Court’s rulings in the
Chapter 11 Cases, including the approvals of the terms and
conditions of any plan of reorganization or DIP Facility; inability
to consummate asset sales; the outcome of the Chapter 11 Cases
generally; the length of time that the Company will operate under
Chapter 11 protection and the availability of operating capital
during the pendency of the Chapter 11 Cases; risks associated with
third party motions in the Chapter 11 Cases, which may interfere
with the Company’s ability to consummate a plan of reorganization
or an alternative restructuring; increased administrative and legal
costs related to the Chapter 11 process; finalization and receipt
of the DIP Facility, the conditions to which the DIP Facility is
subject and the risk that these conditions may not be satisfied for
various reasons, including for reasons outside of the Company's
control; potential delays in the Chapter 11 process due to
unanticipated factors; and potential or existing litigation or
administrative or regulatory proceedings and inherent risks
involved in a bankruptcy process.
Forward-looking statements are also subject to the risk factors
and cautionary language described from time to time in the reports
the Company files with the SEC, including those in the Company’s
most recent Annual Report on Form 10-K and any updates thereto in
the Company’s subsequent Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K. These risks and uncertainties may cause actual
future results to differ materially from those expressed in or
implied by such forward-looking statements. The Company has no
obligation to update or revise these forward-looking statements and
does not undertake to do so, except as required by law.
About Vintage Wine Estates, Inc.
Vintage Wine Estates brings to market a unique portfolio of
cider and Super Premium+ wines at $15+ per bottle. The Company
leverages brand-affiliated wine clubs, tasting rooms, and owned
ecommerce sites in conjunction with deep wholesale relationships to
offer consumers a holistic, omnichannel experience.
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version on businesswire.com: https://www.businesswire.com/news/home/20240724371418/en/
ir@vintagewineestates.com
Vintage Wine Estates (NASDAQ:VWEWW)
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