Administrators’ Report
Pursuant to Section 439A of the Corporations Act (2001)
EVANS & TATE LIMITED ACN 064 820 408
(Administrators Appointed)
(Receivers and Managers Appointed)
and certain subsidiaries as set out in the Report
(All Administrators Appointed)
(All Receivers and Managers Appointed)
AND
EVANS & TATE PREMIUM WINES PTY LTD ACN 000 024 304
(Administrators Appointed)
(Collectively known as “the Group”)
Martin Bruce Jones
Bruce James Carter
9 October 2007
Section 439A(4)(a) Report by Administrators
EVANS & TATE LIMITED ACN 064 820 408
(Administrators Appointed)
(Receivers and Managers Appointed)
and certain subsidiaries as set out in the Report
(All Administrators Appointed)
(All Receivers and Managers Appointed)
AND
EVANS & TATE PREMIUM WINES PTY LTD ACN 000 024 304
(Administrators Appointed)
(Collectively known as “the Group”)
Administrators’ Report Concerning the Affairs of the Group
TABLE OF CONTENTS
GLOSSARY OF TERMS ...................................................................................................3
LISTING OF ANNEXURES ................................................................................................3
1.
EXECUTIVE SUMMARY .......................................................................................4
2.
INTRODUCTION ..................................................................................................5
3.
4.
2.1
Appointment of Administrators and First Meeting of Creditors ............5
2.2
Extension of Convening Period............................................................6
2.3
Deed of Cross Guarantee ....................................................................6
2.4
Recording of Remuneration .................................................................6
2.5
Second Meeting of Creditors ...............................................................7
2.6
Purpose of Report................................................................................7
2.7
Statement of Independence.................................................................8
COMPANY INFORMATION ....................................................................................9
3.1
Corporate Structure .............................................................................9
3.2
Statutory Information............................................................................9
3.3
Company History ...............................................................................26
3.4
Decision to Appoint Administrators ....................................................27
HISTORICAL FINANCIAL INFORMATION ..............................................................28
4.1
Preparation of Financial Statements..................................................28
4.2
Profit and Loss Statement and Preliminary Analysis .........................28
4.3
Balance Sheet and Preliminary Analysis ...........................................29
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5.
6.
7.
8.
STATEMENT OF POSITION ................................................................................33
5.1
Book Values as at 30 June 2007 .......................................................33
5.2
Statement by Directors ......................................................................34
5.3
Receipts and Payments in Administration .........................................34
CAUSES OF FAILURE ........................................................................................34
6.1
The directors’ causes of failure ..........................................................34
6.2
The Administrators’ causes of failure.................................................35
STATUTORY INVESTIGATIONS ...........................................................................38
7.1
Nature and Scope of Review .............................................................38
7.2
Voidable Transactions .......................................................................51
7.3
Insolvent Trading ...............................................................................53
7.4
Director Duties ...................................................................................54
7.5
Other Matters Arising from Investigations..........................................54
CREDITORS OPTIONS ......................................................................................56
8.1
Administration to End.........................................................................57
8.2
Winding up of the Group ....................................................................57
8.3
Execution of Proposed DOCA ...........................................................57
9.
ADMINISTRATORS’ OPINION .............................................................................57
10.
REMUNERATION AND DISBURSEMENTS .............................................................58
11.
SECOND MEETING OF CREDITORS ....................................................................59
12.
11.1
Time and Place of Concurrent Meetings............................................59
11.2
Proof of Debt Form ............................................................................59
11.3
Proxy Forms.......................................................................................59
FURTHER QUERIES ..........................................................................................60
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GLOSSARY OF TERMS
Abbreviation
Description
ABN
Australian Business Number
ACN
Australian Company Number
Act
Advisor
The Corporations Act 2001
333 Performance Management
ANZ
Australia and New Zealand Banking Group Limited
ASIC
Australian Securities and Investments Commission
ATO
Board
DOCA
Australian Taxation Office
Board of Directors of Evans & Tate Ltd
Deed of Company Arrangement
ERV
Estimated Realisable Value
ETW
IFRS
SGC
Evans & Tate Limited
International Financial Reporting Standards
Superannuation Guarantee Charge
Statement
Directors’ Statement about the Company’s
Property, Affairs and Financial Circumstances
Business,
LISTING OF ANNEXURES
Annexure 1
Summary of Appointed Entities
Annexure 2
Administrators’ Remuneration
Liquidators’ Remuneration
The Firm’s Schedule of Hourly Rates & General
Guide to Staff Experience
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1.
EXECUTIVE SUMMARY
Bruce Carter and I were appointed Joint and Several Administrators of Evans & Tate Ltd
and certain subsidiaries on 20 August 2007, pursuant to Section 436A of the Act.
Creditors ratified our appointment as Joint and Several Administrators of the Group at the
first meeting of creditors held on Monday 27 August 2007. At that meeting the creditors
resolved to form a Committee of Creditors.
The secured creditor, ANZ Banking Group Ltd appointed Messrs Peter Anderson, Shaun
Fraser and Andrew Birch of McGrathNicol as Joint and Several Receivers and Managers
of most of the companies in the Group on 21 August 2007. As such, the Receivers and
Managers will be in control of the assets and the operations during the period of the
receivership, with the exception of Evans & Tate Premium Wines Pty Ltd (Administrators
Appointed) which remains under our control.
The Receivers and Managers’ objective will be to realise the assets of ETW and the other
entities to which they have been appointed for the benefit of their appointee, the ANZ
Bank. I am advised that the Receivers and Managers are currently pursuing the sale of
assets.
Evans & Tate is an Australian Company which was listed on the Australian Stock
Exchange (“ASX”) up until the date of our appointment. The Company was established in
1968 by John Tate. Since 1994 his son, Franklin Tate, has led the Company.
Since listing on the ASX in December 1999, the Evans & Tate Wine Group has integrated
a number of acquisitions including Oakridge Vineyards Pty Ltd, Selwyn Viticultural
Services Pty Ltd, Scott Street Portfolio Inc., Cranswick Premium Wines Limited, a
controlling interest of Australian Wines (UK) Limited and Australian wine distributor, Wine
Source.
The primary businesses of the Group are the production of a number of branded wines in
Australia, the marketing and distribution of owned and agency brands in Australia, North
America and the United Kingdom, the production and distribution of branded, exclusive
labelled and unbranded wines, contract winemaking, wine trading (bottled and bulk),
viticultural services and wine tourism through its Visitor Centres in Margaret River
(Western Australia), Griffith (New South Wales), the Yarra Valley and Mildura (both in
Victoria).
Since our appointment on 20 August 2007 we have commenced investigations into the
affairs of the Group. Our preliminary investigations as discussed in this report have
identified a number of issues and transactions that require further investigation which may
give rise to potential recoveries and ultimately funds becoming available for the benefit of
creditors of the Group.
Pursuant to Section 439A of the Act, the second meeting of creditors of the Group is
convened for Wednesday, 17 October 2007 at Kings Hotel, 517 Hay Street, Perth,
Western Australia at 2.00pm. Creditors have the following options available to them at the
meeting:
•
•
Ending the administration of the Group; or
Winding up the Group; or
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•
The Group executing a DOCA
Given the Group’s financial position, the uncertainty as to whether funds will be available
to unsecured creditors following the end of the Receivership and the desire to preserve
Group assets such as the possible proceeds from a sale of the listed shell, our opinion is
that none of these three options is in the best interests of creditors.
It is our opinion, for the reasons set out below, that creditors should resolve that the
meeting be adjourned for a period not to exceed 60 days to be reconvened on or before 14
December 2007:
•
The Receivers and Managers of the Group are currently seeking expressions of
interest in the Group’s business and we have been advised that this process is
likely to be completed at the end of October 2007. For this reason, the likely return
to unsecured creditors at this stage is unknown, however, following the sale
process, we will be in a better position to estimate the potential return to creditors
of the Group.
•
We advise that we have also received interest in the possible purchase of the
corporate shell of the Group which may also provide funds for the benefit of
creditors of the Group. It is too early in the process to determine whether these
options should be pursued and whether the Group should execute a Deed of
Company Arrangement to pursue them.
•
Whilst we have conducted preliminary investigations into the affairs of the Group
since our appointment, further investigations are required to ascertain the potential
recoveries which may be available to creditors if the Group is placed into
liquidation.
•
The adjournment will also provide a further opportunity for any parties to put
forward a Deed of Company Arrangement proposal which may ultimately provide a
return for creditors.
2.
INTRODUCTION
2.1
Appointment of Administrators and First Meeting of Creditors
Creditors of the companies within the Group of which the Administrators were appointed
on 20 August 2007 attended a first meeting of creditors held at Kings Hotel on 27 August
2007. At that meeting, creditors ratified our appointment as Administrators of those
companies and resolved to appoint a Committee of Creditors.
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The appointed Committee members are as follows:
Appointee
Mr Cameron Belyea
Mr Anthony Lewis
Mr Ben Luscombe
Mr Michael Silbert
Mr Richard Erskine
Mr Colin Bussell
Representing
Permanent Nominees (Aust) Limited as Trustee for the
Noteholders
Himself as a Noteholder
Portavin Group as a trade creditor
Himself as an employee
Casama Group as a trade creditor
Bussell Vineyards as a grower
An initial meeting of the Committee of Creditors was conducted on 27 August 2007 with
future meetings to be conducted on a needs basis. Mr Erskine subsequently resigned from
the Committee on 20 September 2007.
A further meeting of the committee was conducted on 26 September 2007.
2.2
Extension of Convening Period
At the first meeting of creditors I expressed my intentions to apply to the Supreme Court of
Western Australia to seek an extension of three months to the convening period for calling
the second meeting of Creditors. The purpose of requesting the extension was to allow
time for the Receivers and Managers appointed by the ANZ Banking Group to complete or
near completion of their appointment, enable the Administrators to further advance our
investigations into the Group which would then enable the Administrators to have a clearer
picture of the options available to Creditors.
On 7 September 2007, Justice Heenan heard our application and granted an extension of
30 days on the basis that he considered there was insufficient evidence of a return to
unsecured creditors to justify a longer extension of time.
2.3
Deed of Cross Guarantee
The 20 Australian companies of the Group are all subject to the terms of a Deed of Cross
Guarantee (“DXG”) which was registered with ASIC.
From a creditors claim perspective, the effect of the DXG is that in the event of the
liquidation of any or all of the entities who were parties to the DXG, each of the parties to
the DXG guarantees and is liable for the payment of the debts due to the creditors of each
of the other entities who were parties to the DXG. In other words, this would mean an
effective pooling of assets and liabilities of the 20 companies. (Note: There are 3 English
and 1 US company (now only 20% owned by ETW) which are outside the DXG).
2.4
Recording of Remuneration
Ordinarily, an Administrator appointed over a Company would seek to have his or her fees
approved by the creditors of that Company at the second creditors meeting and then would
be paid from the assets of that particular Company.
In this case, given the complexity of the Group structure and operations, it is neither
practical nor efficient for the Administrators to attempt to allocate the time of themselves
and their partners and staff to separate entities and to call individual meeting of each
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Company so that their remuneration may be approved by the separate creditors of those
individual Companies.
Nor do I believe it to be feasible to record particular remuneration or expenses against a
particular member of the Group. Such a task would be artificial as work being performed,
or expenses being incurred, can fairly be said to benefit the group generally. I do not
therefore believe it to be feasible or appropriate to attempt to provide separate
remuneration claims to the creditors of each of the Companies.
Accordingly, in addition to the application made to the Court for the extension of the
convening period, I sought an order pursuant to Section 447A of the Act such that for the
purposes of approval by creditors and the Court under Section 449E(1) and for the
purpose of review by the Court under Section 449E(2), all remuneration claimed by the
Administrators in respect of work performed by them as Administrators of each of the
Companies in the Group can be recorded as having been incurred in relation to work
performed for all of the Companies without requiring the Administrators to allocate the
remuneration to or between the Companies or record separately the work performed by
them to each of the Companies.
The purpose of this request was to reduce the costs and administrative tasks within the
Administration as they do not add value to Creditors.
Justice Heenan ordered that the application for a pooling order be adjourned and
stipulated that in order for the application to be relisted, it must be preceded by notice of
my intention to do so being issued 7 days previously to the Creditors Committee and by
publishing a notice to all Creditors in a newspaper or newspaper across Australia.
2.5
Second Meeting of Creditors
Pursuant to Section 439A of the Act, the second meeting of creditors of the Group is
convened for Wednesday, 17 October 2007 at Kings Hotel, 517 Hay Street, Perth,
Western Australia at 2.00pm. The registration desk will be open for creditors to sign in
from 1.30pm and creditors are requested to arrive at least 30 minutes before the
scheduled commencement time of the meeting to ensure that the meeting can start on
time.
At the second meeting, creditors in the Group will decide the Group’s future in voting on
one of the following options:
1. That the meeting be adjourned to 14 December 2007 in accordance with Section
439B(2) of the Act; or
2. That the administration should end and control of the company revert to its
directors; or
3. That the company should be wound up; or
4. Alternatively creditors may resolve that the company execute a DOCA.
2.6
Purpose of Report
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Section 439A(4) of the Act explains the purpose of an Administrator’s report in providing
that the notice (of second meeting) must be accompanied by a copy of:
(a)
A report by the Administrator about the company’s business, property, affairs
and financial circumstances; and
(b)
A statement setting out the Administrator’s opinion about each of the following
matters:
(c)
2.7
ƒ
Whether it would be in the creditors’ interest for the administration to end;
ƒ
Whether it would be in the creditors’ interest for the company to be wound
up;
ƒ
Whether it would be in the creditors’ interests for the company to execute
a Deed of Company Arrangement; and
ƒ
His or her reasons for those opinions.
If a Deed of Company Arrangement is proposed – a statement setting out
details of the proposed deed.
Statement of Independence
The Administrators considered the question of their independence prior to accepting
appointment as Administrators. Martin Jones first met with the Group’s directors on 17
August 2007.
I have not been provided with any indemnity, guarantee or contribution from the directors
or their associated businesses for any of my fees and expenses.
Since commencement of the Administration, I have received an indemnity from the
Receiver and Manager, McGrathNicol, for my fees, expenses and any liability arising out of
action I have taken under section 440C of the Act in respect of certain leases between the
Group and various creditors.
Since commencement of the Administration, I have held discussions with the Receiver and
Manager, with a view to agreeing a contribution from their client, the ANZ Banking Group,
to fund the Administration. No agreement has been finalised with these parties.
It is my view that, taking into account all of the issues, that no conflict of interest arises for
the acceptance of the appointment as voluntary administrators.
Bruce Carter and I are partners of Ferrier Hodgson. Ferrier Hodgson is Australia’s and the
Asia-Pacific’s largest independent corporate restructuring practice with 47 partners and
over 440 staff throughout Australia, New Zealand and Asia. Ferrier Hodgson does not
provide accounting, audit, legal or taxation services.
Bruce Carter is a Chartered Accountant, Registered Liquidator and member of the
Insolvency Practitioners Association of Australia with over 25 years experience in
corporate insolvency.
I am also a Chartered Accountant, Registered Liquidator and member of the Insolvency
Practitioners Association of Australia with over 25 years experience in corporate
insolvency.
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Further information regarding Ferrier Hodgson and the Administrators can be obtained
from the firm’s website at www.ferrierhodgson.com.
3.
COMPANY INFORMATION
3.1
Corporate Structure
I set out below a schematic, showing the relationship between the entities over which we have been
appointed:
EVANS & TATE LIMITED
ACN 064 830 408
100%
Evans & Tate (USA)
Pty Ltd
100%
Evans & Tate Premium Wines Pty Litd
ACN 000 024 304
ACN 084 350 425
Wine Source (NSW) Pty Ltd
ACN 062 372 605
100%
Wine Source
Holdings Pty Ltd
100%
100%
ACN 082 150 801
Sovint Pty Limited
ACN 005 514 367
Wine Source (VIC) Pty Ltd
ACN 065 453 803
100% Australian Wineries Pty Ltd
ACN 058 399 134
Wine Source (WA) Pty Ltd
ACN 111 551 547
Wine Source (QLD) Pty Ltd
Oakridge Vineyards
Pty Ltd
100%
100%
Cranswick Purchasing Pty
Ltd ACN 082 976 921
100%
Redello Wines Pty Limited
ACN 076 706 440
ACN 108 365 742
ACN 003 753 491
100%
Ironbark Wines Pty Ltd
ACN 090 894 974
Selwyn Viticultural
Services Pty Ltd
100%
ACN 093 317 198
100%
Australian Premium Wines
Pty Ltd
ACN 001 189 859
Selwyn Wines Pty Ltd 100%
100%
ACN 055 105 201
Evans & Tate
Vineyards Pty Ltd
100%
100%
Irybel Pty Limited
A.W.T. Pty Limited
ACN 005 405 194
ACN 054 567 69
ACN 008 713 764
KEY:
Receivers and Managers Appointed and Administrators Appointed
Administrators Appointed
3.2
Statutory Information
A search of the ASIC database has revealed the following information:
3.2.1
Incorporation Date and Registered Office
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The statutory information for each company in the Group is presented separately below,
with more detailed information on each entity in the Group. However, I summarise the
same as follows:
Company
Australian Premium Wines Pty Ltd
Date of
Incorporation
22/11/1973
Registered Office
Address
54 Salvado Road
Wembley WA 6014
Australian Wineries Pty Ltd
11/01/1993
54 Salvado Road
Wembley WA 6014
A.W.T. Pty Limited
12/12/1991
Cranswick Purchasing Pty Ltd
15/06/1998
Evans & Tate (USA) Pty Ltd
15/09/1998
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
Evans & Tate Limited
30/05/1994
Evans & Tate Premium Wines Pty Ltd
6/08/1931
Evans & Tate Vineyards Pty Ltd
5/09/1968
Ironbark Wines Pty Ltd
13/12/1999
Irybel Pty Limited
19/12/1977
Oakridge Vineyards Pty Ltd
18/12/1996
Redello Wines Pty Limited
14/04/1989
Selwyn Viticultural Services Pty Ltd
14/06/2000
Selwyn Wines Pty Ltd
13/02/1992
Sovint Pty Limited
20/02/1979
Wine Source (NSW) Pty Ltd
5/11/1993
Wine Source (QLD) Pty Ltd
15/03/2004
Wine Source (VIC) Pty Ltd
30/06/1994
Wine Source (WA) Pty Ltd
27/10/2004
Wine Source Holdings Pty Ltd
30/03/1998
3.2.2
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
54 Salvado Road
Wembley WA 6014
Previous Names (if any)
Australian Premium Wines Ltd
The Alambie Wine Company Ltd
The Alambie Wine Company Pty Ltd
Sun Garden Packers Pty Ltd
Cranswick Smith Wines Pty Limited
Jabiru Wines of Australia Pty. Limited
ETW Vineyard Management Pty Ltd
Grape Expectationa Vineyard
Management Pty Ltd
Cranswick Premium Wines Pty Ltd
Cranswick Premium Wines Limited
Cranswick Estate Wines Limited
Cranswick-Smith & Sons Pty. Limited
Francesco Cinzano & Cia (Australia)
Pty Ltd
E. & T. Vineyards Pty Ltd
Sun Garden Packers Pty Ltd
The Alambie Wine Company Pty
Limited
Alambie Wines Pty. Ltd.
Yuiumbie Wines Pty. Ltd.
Oakridge Vineyards Limited
Coral-Coast Wines Pty. Limited
Leamax Pty. Limited
Twinpark Nominees Pty Ltd
Sunlake Holdings Pty Ltd
Cinzano (Victoria) Pty. Ltd.
Casama Pty. Ltd.
SNFD Pty. Ltd.
Skilton Round Pty. Ltd.
Evans & Tate Holdings Pty Ltd
Company Officers
The following table sets out the commonalities of directorships recorded by ASIC as at the
date of my appointment, within the companies that make up the Group. Please note that
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the Group’s records show that Franklin and Heather Tate resigned as director and
alternate director respectively on 13 August 2007:
Company
John
David
Hopkins
Franklin
Joel
Tate
Heather
Tate**
Evans & Tate Limited
Australian Premium
Wines Pty Ltd
Australian Wineries Pty
Ltd
A.W.T. Pty Ltd
Cranswick Purchasing
Pty Ltd
Evans & Tate (USA) Pty
Ltd
Evans & Tate Premium
Wines Pty Ltd
Evans & Tate Vineyards
Pty Ltd
Ironbark Wines Pty Ltd
Irybel Pty Limited
Oakridge Vineyards Pty
Ltd
Redello Wines Pty
Limited
Selwyn Wines Pty Ltd
Selwyn Viticultural
Services Pty Ltd
Sovint Pty Limited
Wine Source (NSW) Pty
Ltd
Wine Source (Qld) Pty
Ltd
Wine Source (Vic) Pty
Ltd
Wine Sourve (WA) Pty
Ltd
Wine Source Holdings
Pty Ltd
x
Robert
Norman
Scott
Craig
Watkins
Peter
Wallace
Martin
Clark
Johnson
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
** Heather Tate is an Alternate Director for Franklin Joel Tate.
All of the remaining directors resigned following my appointment as Administrator.
Michael Joel Silbert and Andrew Michael MacLachlan were the company secretaries for all
of the above companies as at the date of my appointment. Mr MacLachlan subsequently
resigned as Company Secretary from all companies on 25 September 2007.
A search of the National Personal Insolvency Index maintained by the Insolvency Trustee
Service Australia shows that none of the Directors or Company Secretaries is a bankrupt
or is subject to a Personal Insolvency Agreement under Part X of the Bankruptcy Act 1966.
3.2.3
Detailed Company Information
Evans & Tate Limited (“ETW”)
ETW was incorporated in the Australian Capital Territory on 30 May 1994. It was officially
listed on the Australian Stock Exchange (“ASX”) in December 1999.
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ETW is the principal and listed holding entity and trustee of the 15 July 2005 Group Deed
of Cross Guarantee. The principal continuing activity of the consolidated entity is
viticulture, winemaking, marketing and distribution. The consolidated entity is also actively
involved in contract wine processing, contract wine supply and wine trading.
ETW is also the holder of various Group Leases, Trademarks, Business Names and liquor
licences and is also counterparty to most of the significant corporate contracts in relation to
the Group’s distribution agreements, operations contracts and employee contracts.
The Margaret River Winery and Redbrook Visitors Centre are both owned by ETW.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Peter Wallace
Martin Clark Johnson
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
28/06/1994
22/08/2001
02/12/2004
18/07/2005
13/10/2005
25/05/2006
16/09/1999
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
As at the date of my appointment, ETW had the following charges registered against it:
Charge Holder
Australian & New Zealand Banking Group Ltd
Australian & New Zealand Banking Group Ltd
Australian & New Zealand Banking Group Ltd
Australian & New Zealand Banking Group Ltd
Charge
No.
482077
738111
827015
929804
Date
Registered
21/03/1995
23/02/2000
18/10/2001
18/03/2003
Nature of Charge
Both Fixed & Floating
Both Fixed & Floating
Both Fixed & Floating
Both Fixed & Floating
According to a search of the ASIC database, ETW has issued:
•
•
•
•
19,984,419 Convertible Notes;
31,170,455 Reset Convertable Preference shares (known as “WInES”);
92,672,330 ordinary shares; and
3,962,086 share options expiring 30 October 2007.
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The company's 10 major shareholders according to the share register as at the date of my
appointment were:
Shareholder Name
Grape Expectations Enterprises Pty Ltd
Crownace Pty Ltd
UBS Nominees Pty Ltd
Kerry Wark Wark Superannuation Fund
Pacific Salt Superannuation Pty Limited
Cameron David Zabel
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Terry Robert Pitt
Gary James Rosbrook and Donna Margaret Rosbrook –
Rosbrook Super Fund A/c
Balance of Shareholders
Total
No. of
Shares Held
29,195,043
1,200,000
1,171,329
1,000,000
695,369
500,000
425,000
416,969
397,836
% of
Total
Capital
31.50
1.30
1.26
1.08
0.75
0.54
0.46
0.45
0.43
392,590
57,278,195
92,672,330
0.42
61.81
100.00%
The company's 10 major Convertible Noteholders according to the share register as at the
date of my appointment were:
Convertible Noteholder Name
Drysdale Metals Pty Limited
Maniciti Pte Ltd
Argo Investments Limited
Merrill Lynch (Australia) Nominees Pty Limited
Andrew Winston Doyle
Mohamad Abas
Sandstone Nominees Pty Ltd JW MacKenzie Private Super
Capital Enterprises (WA) Pty Ltd
Stephen James Hyde, Shelagh Elizabeth Hyde Super Fund
Andover Nominees Pty Ltd
Balance of Noteholders
Total
No. of
Units Held
2,000,000
1,238,000
975,638
610,000
600,000
500,760
446,623
401,320
389,667
369,342
12,453,069
19,984,419
% of
Total
Capital
10.01
6.19
4.88
3.05
3.00
2.51
2.24
2.01
1.95
1.85
62.31
100.00%
The company's 10 major WInES holders according to the share register as at the date of
my appointment were:
Convertible Preference Shareholder Name
Burruwa Pty Ltd
Abelia Grove Pty Ltd
Grape Expectations Enterprises Pty Ltd
Brispot Nominees Pty Ltd
Sandstone Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited – A/c 2
Argo Investments Limited
Dr Peter Charles Wilson, Suzanne Adele Wilson & Peter
C Wilson Superannuation Fund
Citicorp Nominees Pty Limited
Stephen James Hyde, Shelagh Elizabeth Hyde Super
Fund
Balance of Shareholders
Total
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Page 13
No. of
Shares Held
1,811,466
1,689,023
1,369,000
1,333,599
1,217,020
1,124,974
1,000,000
% of
Total
Capital
5.81
5.42
4.39
4.28
3.90
3.61
3.21
1,000,000
757,200
3.21
2.43
718,500
19,149,673
31,170,455
2.31
61.43
100.00%
8 October 2007
Section 439A(4)(a) Report by Administrators
The company's 10 major share option holders according to the share register as at the
date of my appointment were:
Share Option Holder Name
Drysdale Metals Pty Limited
Denis Mason & Vera Joyce Mason
Winpar Holdings Limited
Nicholas John Ireland
Alan David Vincent
Australian Executor Trustees NSW Ltd – International
Wine Investment Fund
Ego Pty Ltd
Elizabeth Friderich
IF Planning Pty Ltd
Philip Rees, Susan Rees & S Rees Superannuation Fund
Balance of Share Option Holders
Total
No. of
Options
Held
400,000
250,000
214,827
105,900
92,529
% of
Total
Capital
10.10
6.31
5.42
2.67
2.34
90,740
66,000
65,000
61,373
58,788
2,556,929
3,962,086
2.29
1.67
1.64
1.55
1.48
64.53
100.00%
Australian Premium Wines Pty Ltd (“APW”)
APW was incorporated in New South Wales on 22 November 1973.
APW is currently a dormant company but holds various trademarks and a business name.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
17/03/2003
01/08/2005
01/08/2005
01/08/2005
17/03/2003
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
APW has issued 9,884,307 ordinary shares with Evans and Tate Premium Wines Pty Ltd
(“ETPW”) being the sole shareholder of all the issued shares.
As at the date of my appointment, APW had the following charges registered against it:
Charge Holder
Australian & New Zealand Banking Group Ltd
Australian & New Zealand Banking Group Ltd
Australian & New Zealand Banking Group Ltd
E&T - 439A report final sent to printer
Charge
No.
313067
929816
929822
Page 14
Date
Registered
24/09/1991
18/03/2003
17/03/2003
Nature of Charge
Both Fixed & Floating
Both Fixed & Floating
Fixed
8 October 2007
Section 439A(4)(a) Report by Administrators
Australian Wineries Pty Limited (“AW”)
AW was incorporated in South Australia on 11 January 1993.
AW is the holder of various trademarks but has no operational activities.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
17/03/2003
01/08/2005
01/08/2005
01/08/2005
17/03/2003
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
AW has issued 3 ordinary shares with the company’s only shareholder being ETPW.
As at the date of my appointment, AW had the following charge registered against it:
Charge Holder
Australian & New Zealand Banking Group Ltd
Charge
No.
929814
Date
Registered
18/06/2003
Nature of Charge
Both Fixed & Floating
A.W.T. Pty Ltd (“AWT”)
AWT was incorporated in New South Wales on 12 December 1991 but is currently a
dormant company.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
17/03/2003
01/08/2005
01/08/2005
01/08/2005
17/03/2003
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
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Page 15
8 October 2007
Section 439A(4)(a) Report by Administrators
AWT has issued 2 ordinary shares with the company’s only shareholder being APW.
As at the date of my appointment, AWT had the following charges registered against it:
Charge Holder
Australian & New Zealand Banking Group Ltd
Australian & New Zealand Banking Group Ltd
Charge
No.
Date
Registered
Nature of Charge
929809
1167739
18/03/2003
02/06/2005
Both Fixed & Floating
Both Fixed & Floating
Cranswick Purchasing Pty Limited (“CP”)
CP was incorporated in New South Wales on 15 June 1998 but is currently a dormant
company.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
17/03/2003
01/08/2005
01/08/2005
01/08/2005
17/03/2003
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
CP has issued 2 ordinary shares with the company’s only shareholder being ETPW.
As at the date of my appointment, CP had the following charge registered against it:
Charge Holder
Australian & New Zealand Banking Group Ltd
Charge
No.
929820
Date
Registered
18/03/2003
Nature of Charge
Both Fixed & Floating
Evans & Tate (USA) Pty Ltd (“ETUSA”)
ETUSA was incorporated in Western Australia on 15 September 1998 as Grape
Expectations Vineyard Management Pty Ltd. It subsequently changed its name to ETW
Vineyard Management Pty Ltd from 18 January 2000 until 7 April 2002 before assuming
the name of ETUSA.
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Page 16
8 October 2007
Section 439A(4)(a) Report by Administrators
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
15/09/1998
01/08/2005
01/08/2005
01/08/2005
23/01/2004
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
ETUSA has issued 100 ordinary shares with the company’s sole shareholder being ETW.
As at the date of my appointment, ETUSA had the following charges registered against it:
Charge Holder
Australian & New Zealand Banking Group Ltd
Australian & New Zealand Banking Group Ltd
Charge
No.
929798
929799
Date
Registered
18/03/2003
18/03/2003
Nature of Charge
Both Fixed & Floating
Both Fixed & Floating
ETUSA is the holder of a 20% interest in a Californian registered company, Scott Street
Portfolio Inc. which is the US distribution business for the Group.
Evans & Tate Premium Wines Pty Ltd (“ETPW”)
ETPW was incorporated in New South Wales on 6 August 1931 as Francesco Cinzano &
CIA (Australia) Pty Ltd. It subsequently changed its name on three (3) occasions to
Cranswick-Smith & Sons Pty Limited on 8 April 1991, Cranswick Estate Wines Limited on
22 September 1997 and Cranswick Premium Wines Limited on 22 September 1997 and
finally to its present legal name on 25 June 2004.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
17/03/2003
01/08/2005
01/08/2005
01/08/2005
17/03/2003
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
ETPW has issued 46,432,071 ordinary shares with the parent company, ETW being the
sole shareholder.
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Page 17
8 October 2007
Section 439A(4)(a) Report by Administrators
As at the date of my appointment, ETPW had no charges registered against it:
ETPW holds a liquor licence plus various trademarks and business names but does not
conduct any trading activities.
Evans & Tate Vineyards Pty Ltd (“ETV”)
ETV was incorporated in Western Australia on 5 September 1968 as E & T Vineyards Pty
Ltd and subsequently changed its name to its present legal name on 1 February 1994.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
30/11/1992
01/08/2005
01/08/2005
01/08/2005
23/01/2004
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
ETV has issued 400 ordinary shares with the parent company, ETW being the sole
shareholder.
As at the date of my appointment, ETV had the following charges registered against it:
Charge Holder
Australian & New Zealand Banking Group Ltd
Australian & New Zealand Banking Group Ltd
Charge
No.
738113
929805`
Date
Registered
29/02/2000
18/03/2003
Nature of Charge
Both Fixed & Floating
Both Fixed & Floating
ETV is the registered owner of the Redbrook Winery which includes plant & equipment
plus the property and vineyard assets.
Ironbark Wines Pty Ltd (“Ironbark”)
Ironbark was incorporated in Victoria on 13 December 1999. An ASIC search on the date
of my appointment, 20 August 2007 identified the following individuals acted as directors or
secretaries of the company within 12 months of my appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
E&T - 439A report final sent to printer
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Page 18
Appointed
20/12/2001
01/08/2005
01/08/2005
01/08/2005
23/01/2004
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
8 October 2007
Section 439A(4)(a) Report by Administrators
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
Ironbark has issued 1 ordinary share which is held by its sole shareholder, Oakridge
Vineyards Pty Ltd (“OV”).
As at the date of my appointment, Ironbark had the following charge registered against it:
Charge
No.
1167742
Charge Holder
Australia and New Zealand Banking Group Ltd
Date
Registered
02/06/2005
Nature of Charge
Both Fixed & Floating
Ironbark is a dormant and non operating company.
Irybel Pty Limited (“Irybel”)
Irybel was incorporated in Victoria on 19 December 1977.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
17/03/2003
01/08/2005
01/08/2005
01/08/2005
17/03/2003
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
Irybel has issued 12 ordinary shares with its sole shareholder being APW.
As at the date of my appointment, Irybel had the following charge registered against it:
Charge
No.
929818
Charge Holder
Australia and New Zealand Banking Group Ltd
Date
Registered
18/03/2003
Nature of Charge
Both Fixed & Floating
Irybel is a dormant and non-operating company.
Oakridge Vineyards Pty Ltd (“Oakridge”)
The company was incorporated in Victoria on 18 December 1996.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
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Page 19
8 October 2007
Section 439A(4)(a) Report by Administrators
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
12/10/2001
01/08/2005
01/08/2005
01/08/2005
23/01/2004
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
Oakridge has issued 13,306,704 ordinary shares with the company’s only shareholder
being the parent company ETW.
As at the date of my appointment, Oakridge had the following charges registered against it:
Charge Holder
Australia and New Zealand Banking Group Ltd
Australia and New Zealand Banking Group Ltd
Charge
No.
828886
929802
Date
Registered
31/10/2001
18/03/2003
Nature of Charge
Both Fixed & Floating
Both Fixed & Floating
Oakridge is based in the Yarra Valley in Victoria and is the owner of certain winery assets
which includes a liquor licence and trademarks but is not the owner of real property.
Oakridge also holds various operating and finance leases.
Redello Wines Pty Limited (“Redello”)
Redello was incorporated in New South Wales on 14 April 1989.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
17/03/2003
01/08/2005
01/08/2005
01/08/2005
17/03/2003
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
Redello has issued 2 ordinary shares with the company’s sole shareholder being ETPW.
As at the date of my appointment, Redello had the following charge registered against it:
Charge Holder
Australia and New Zealand Banking Group Ltd
E&T - 439A report final sent to printer
Charge
No.
929807
Page 20
Date
Registered
18/03/2003
Nature of Charge
Both Fixed & Floating
8 October 2007
Section 439A(4)(a) Report by Administrators
Redello is a dormant and non-operating company.
Selwyn Viticultural Services Pty Ltd (“SVS”)
The company was incorporated in Western Australia on 14 June 2000.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
24/08/2001
01/08/2005
01/08/2005
01/08/2005
23/01/2004
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
SVS has issued 1,000 ordinary shares with the company’s only shareholder being the
parent company ETW.
As at the date of my appointment, SVS had the following charge registered against it:
Charge Holder
Australia and New Zealand Banking Group Ltd
Charge
No.
929800
Date
Registered
18/03/2003
Nature of Charge
Both Fixed & Floating
SVS’s main activities include the management of Viticultural services. It is also the holder
of certain assets including motor vehicles, winery equipment and furniture & fittings plus
various operating and finance leases.
Selwyn Wines Pty Ltd (“Selwyn”)
The company was incorporated in Western Australia on 13 February 1992.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
21/12/1999
01/08/2005
01/08/2005
01/08/2005
23/01/2004
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
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Page 21
8 October 2007
Section 439A(4)(a) Report by Administrators
Selwyn has issued 20 ordinary shares with the company’s only shareholder being the
parent company ETW.
As at the date of my appointment, Selwyn had the following charges registered against it:
Charge
No.
738114
929801
Charge Holder
Australia and New Zealand Banking Group Ltd
Australia and New Zealand Banking Group Ltd
Date
Registered
29/02/2000
18/03/2003
Nature of Charge
Both Fixed & Floating
Both Fixed & Floating
Selwyn is the holder of certain trademarks, business names and plant and equipment.
Sovint Pty Limited (“Sovint”)
Sovint was incorporated in Victoria on 20 February 1979. .
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
17/03/2003
01/08/2005
01/08/2005
01/08/2005
17/03/2003
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
Sovint has issued 10,000 ordinary shares with the company’s sole shareholder being
ETPW.
As at the date of my appointment, Sovint had the following charge registered against it:
Charge
No.
929806
Charge Holder
Australia and New Zealand Banking Group Ltd
Date
Registered
18/03/2003
Nature of Charge
Both Fixed & Floating
Sovint is a dormant and inoperative company within the Group.
Wine Source (NSW) Pty Ltd (“WSNSW”)
The company was incorporated in Victoria on 5 November 1993.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
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Page 22
8 October 2007
Section 439A(4)(a) Report by Administrators
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
07/10/2004
01/08/2005
01/08/2005
01/08/2005
07/10/2004
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
WSNSW has issued 13 ordinary shares with the company’s only shareholder being Wine
Source Holdings Pty Ltd. (“WSH”)
As at the date of my appointment, WSNSW had the following charge registered against it:
Charge Holder
Australia and New Zealand Banking Group Ltd
Charge
No.
1081741
Date
Registered
13/09/2004
Nature of Charge
Both Fixed & Floating
WSNSW is the wine distributor for the Group for the state of New South Wales.
Wine Source (QLD) Pty Ltd (“WSQ”)
WSQ was incorporated in Queensland on 15 March 2004.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
23/02/2005
01/08/2005
01/08/2005
01/08/2005
23/02/2005
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
WSQ has issued 200 ordinary shares with the company’s only shareholder being WSH.
As at the date of my appointment, WSQ had the following charges registered against it:
Charge Holder
Australia and New Zealand Banking Group Ltd
Australia and New Zealand Banking Group Ltd
Charge
No.
828886
929802
Date
Registered
31/10/2001
18/03/2003
Nature of Charge
Both Fixed & Floating
Both Fixed & Floating
WSQ is the wine distributor for the Group for the state of Queensland.
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Page 23
8 October 2007
Section 439A(4)(a) Report by Administrators
Wine Source (VIC) Pty Ltd (“WSVIC”)
The company was incorporated in Victoria on 30 June 1994.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
07/10/2004
01/08/2005
01/08/2005
01/08/2005
07/10/2004
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
WSVIC has issued 40 ordinary shares with the company’s only shareholder being WSH.
As at the date of my appointment, WSVIC had the following charge registered against it:
Charge Holder
Australia and New Zealand Banking Group Ltd
Charge
No.
1081740
Date
Registered
13/09/2004
Nature of Charge
Both Fixed & Floating
WSVIC is the wine distributor for the Group for the state of Victoria
Wine Source (WA) Pty Ltd (“WSWA”)
The company was incorporated in Western Australia on 27 October 2004.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Secretary
Secretary
Appointed
27/10/2004
01/08/2005
01/08/2005
01/08/2005
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
WSWA has issued 2 ordinary shares with the company’s only shareholder being WSH.
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As at the date of my appointment, WSWA had the following charge registered against it:
Charge
No.
1167741
Charge Holder
Australia and New Zealand Banking Group Ltd
Date
Registered
02/06/2005
Nature of Charge
Both Fixed & Floating
WSWA is the wine distributor for the Group for the state of Western Australia.
Wine Source Holdings Pty Ltd (“WSH”)
The company was incorporated in Western Australia on 30 March 1998 and was initially
named Evans & Tate Holdings Pty Ltd. It changed to its present name on 9 November
2004.
An ASIC search on the date of my appointment, 20 August 2007 identified the following
individuals acted as directors or secretaries of the company within 12 months of my
appointment:
Name
Franklin Joel Tate
John David Hopkins
Craig Watkins
Robert Norman Scott
Heather Mary Tate
Michael Joel Silbert
Andrew Michael MacLachlan
Position
Director
Director
Director
Director
Alternate Director
Secretary
Secretary
Appointed
30/03/1998
01/08/2005
01/08/2005
01/08/2005
23/01/2004
25/05/2006
25/05/2006
Ceased
Current
Current
Current
Current
Current
Current
Current
Please note that the company’s records show that Franklin and Heather Tate resigned
from their positions on 13 August 2007. All remaining officers with the exception of Michael
Silbert have resigned following my appointment as administrator.
WSH has issued 100 ordinary shares with the company’s only shareholder being the
parent company ETW.
As at the date of my appointment, WSH had the following charges registered against it:
Charge Holder
Australia and New Zealand Banking Group Ltd
Australia and New Zealand Banking Group Ltd
Charge
No.
738112
929803
Date
Registered
29/02/2000
18/03/2003
Nature of Charge
Both Fixed & Floating
Both Fixed & Floating
The Company was formerly known as Evans & Tate Holdings Pty Ltd and acts as the
holding company for the four state distribution companies listed above. This Company also
holds the SA and NSW liquor licences.
3.2.4
Registered Chargeholder
At the date of my appointment, the Australian and New Zealand Banking Group Ltd
(“ANZ”) held securities over the Group excluding ETPW. They are registered fixed and
floating charges, which are held over the assets and undertakings of the Group excluding
ETPW.
The Group’s current banking facilities with ANZ total $110,812,000 million and are all fully
drawn.
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The Group also has a number of leases and hire purchase contracts primarily with ANZ
but also with other lenders. This includes items such as office partitioning, office equipment
and plant and machinery used in the vineyards.
As at 20 August 2007, the outstanding lease and hire purchase liabilities with all financiers
was $5,111,687. I do not have any present valuations of these items and consequently,
am unaware of any equity that may exist in individual contracts.
Under a Cross Deed of Covenant and Negative Pledge Agreement dated 15 July 2005, all
companies in the Group with the exception of ETPW have guaranteed each other’s debts
to ANZ. Therefore each company in the Group with the exception of ETPW is liable for
ANZ’s debts until the monies owing under its securities are fully discharged.
3.2.5
Outstanding Winding up Applications
There were no winding up applications outstanding as at the date of my appointment.
3.3
Company History
ETW is an Australian company listed on the ASX. It was established in 1968 by Mr. John
Tate and Mr John Evans. ETW’s main activities include winemaking, wine marketing,
vineyard management and development with production operations in Margaret River, WA,
the Yarra Valley and Mildura in VIC, and Griffith in NSW.
Since listing on the ASX in December 1999, the ETW Group has pursued and secured a
number of acquisitions including Oakridge Vineyards Pty Ltd, Selwyn Viticultural Services
Pty Ltd, Scott Street Portfolio Inc., Cranswick Premium Wines Limited (“Cranswick”),
Australian Wineries (UK) Limited and most recently, the Australian distributor, Wine
Source.
The merger with Cranswick in March 2003 transformed the company into Australia’s 8th
largest wine producer.
At its peak, the Group employed approximately 300 staff across Australia, the United
States of America and the United Kingdom.
Following the purchase of Cranswick in March 2003, the Group acquired a bigger export
orientation. The markets of the UK and Europe were the major export destinations,
generating approximately 24% of revenue. The main export brand Barramundi was
redesigned and relaunched in the UK market in March 2004.
A key element of ETWs strategy was taking control over distribution of the wine products it
produced, including the purchase and consolidation of distributors in Australia, the UK and
the USA. ETW acquired the remaining interest in their eastern Australia distributor Wine
Source in July 2004, with a plan to increase its coverage of the Australian market and
improve transaction efficiency and effectiveness.
As a result of the acquisitions, the Evans & Tate Wine Group has combined five core wine
businesses into a single full service supply capability offering:
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•
Production and sale of bottled wines through the distribution networks to licensed
premises, retail, wholesale and direct to customers (through the Cellar Door) under
the Evans & Tate Wine Group’s own distinct proprietary labels;
•
Management of distribution networks in Australasia, UK/Europe and North America
to efficiently deliver products to customers and consumers;
•
Provision of viticultural services to growers and other clients to maximise the quality
of fruit available to the Group or simply as a fee-for-service to third parties;
•
Contract processing and primary wine supply for clients who in turn package and
market such product under their own labels; and
•
Wine tourism through the operation of cellar door facilities and promotion of wine
tourism in Margaret River, Yarra Valley, Mildura and Griffith areas.
Recently, the wine industry has been highly competitive, with a global oversupply of
grapes and international sales have been hurt by the stronger Australian dollar and
stronger bargaining power of wine retailers, particularly in the UK and also in Australia.
ETW’s interim December 2004 account showed a record profit of $3.7 million and the
company declared and paid an interim dividend of $4.6 million. This dividend was
premature, as the full year June 2005 accounts would end up disclosing a loss of $49.8
million.
The loss was the result of a massive write down of inventories due to deterioration in bulk
wine prices. Questions over the integrity of ETW’s financial reporting process and the need
to restructure the business in the wake of the loss led to significant changes to the board of
directors and management.
3.4
Decision to Appoint Administrators
From a net profit after tax of $6.3m for the full year to June 2004, the Group reported a net
loss of $49.8m (subsequently restated to $73.8m following the adoption of IFRS in 2006)
for the year ended 30 June 2005. The cause of the loss was explained to the market as a
result of $45.2m in write-downs of the Group’s inventory and intangible assets.
The loss of 2005 appears to have raised major concerns with the Group’s largest individual
creditor, the ANZ. ANZ arranged for the Group to engage the Advisor to conduct a review
of the Group and report to the ANZ. Following receipt of this report the ANZ encouraged
the Group to engage the Advisor to assist with forecasting and managing the finance
function of the Group. Documents available to us appear to indicate that the Advisor
effectively took control of the finance function and forecasting for the Group for the initial
part of their engagement to April 2006. Thereafter the Advisor’s role was to provide
corporate advisory and transaction (asset sale and restructuring) support. The Advisor’s
formal engagement was terminated by the Board of ETW, with the agreement of ANZ in
March 2007.
Together with the Advisor and with the active participation of ANZ, the Board of ETW
embarked on what would become a two year restructuring process in an attempt at
restructuring the Group’s business and returning it to profitability.
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Operations and cash flow during this period however continued to be adversely effected by
losses incurred by the Group, with the effect that further borrowings were required from the
ANZ. The impact of this was that instead of using planned asset disposals under the
restructuring plan to reduce debt, the proceeds from asset sales were used to repay new
advances from the ANZ and repay some existing indebtedness.
During the course of the restructuring period the Board looked at a number of opportunities
with a view to selling the assets of the business either individually as stated above or as a
going concern. The last of these proposals, a bid by Pendulum and McWilliams Wines
failed in August 2007. In a letter of 17 August 2007, ANZ put the Board on notice that the
Bank would not be prepared to continue or extend the existing banking facilities.
The Board held a meeting on 20 August 2007 and determined that in the absence of
ANZ’s support, they were no longer convinced as to the Group’s solvency and passed a
resolution to appoint Martin Jones and Bruce Carter as administrators of the Group.
On notification by the Board that the directors had resolved that the Group was insolvent
and that administrators were to be appointed, ANZ appointed Peter Anderson, Shaun
Fraser and Andrew Birch on 21 August 2007 as Receivers and Managers.
4.
HISTORICAL FINANCIAL INFORMATION
4.1
Preparation of Financial Statements
The Group’s financial statements were prepared up to 30 June 2007 but are in
management accounts format only. KPMG Chartered Accountants audited the financial
statements of the Group up to the year ended 30 June 2006. PKF Chartered Accountants
were engaged to audit the Group for the financial year ending 30 June 2007, but the audit
process was not completed before 20 August 2007.
The Group also prepared various management accounts and reports on a monthly basis.
4.2
Profit and Loss Statement and Preliminary Analysis
I detail below a summary of the published ETW consolidated group profit and loss results
for years 2003 to 2006 together with the draft 2007 results:
Sales (net)
Cost of Sales
Gross Profit
Gross Profit Margin %
Other Income
Total Revenue
Operating Expenses
Profit
(Loss)
from
ordinary activities
Income
tax
refund/
(expense)
Net Profit after Tax
Dividend Paid
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2003
$’000
47,259
(29,401)
17,858
37.8%
15,884
33,742
(27,078)
6,664
2004
$’000
72,960
(42,194)
30,766
42.0%
28,683
59,449
(52,130)
7,319
2005
$’000
96,383
(58,367)
38,016
39.4%
7,172
45,188
(125,253)
(80,065)
(2,233)
305
6,317
$4,431
2,975
$7,624
3,412
$(73,748)
4,647
Page 28
2006
$’000
80,774
(57,005)
23,769
29.4%
6,876
30,645
(94,495)
(63,850)
2007
$’000
67,261
(43,361)
23,900
35.6%
7,524
31,424
(61,169)
(29,745)
$(63,850)
-
$(29,745)
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8 October 2007
Section 439A(4)(a) Report by Administrators
As is demonstrated above, during the restructuring period covered by the 2006 and 2007
years, the Group suffered a decline in the level of sales as operations were rationalised. I
also note the following:
•
ETW continued to suffer substantial trading losses during the period of the
restructuring;
•
Gross Profit dropped to 29% in 2006 before seeing improvement in 2007; and
•
Interest costs for 2007 financial year was $14.777 million, an increase of $3.96
million over the 2006 financial year and almost double the amount for the 2005
financial year. We are advised by Group management that the $14.777 million of
interest incurred in the 2007 financial year was capitalised by ANZ under an
interest moratorium. Interest costs as a percentage of revenue have increased as
follows:
Year
2003
2004
2005
2006
2007
4.3
Gross
Sales
$’000
47,259
72,960
96,383
80,774
67,261
Interest
Expense
$’000
3,965
6,513
9,751
10,811
14,777
%
8.4%
8.9%
10.1%
13.4%
21.9%
Balance Sheet and Preliminary Analysis
I detail below a summary of the published ETW consolidated balance sheet results
together with the draft 2007 results for the following periods:
June 2003
$’000
June 2004
$’000
June 2005
$’000
June 2006
$’000
June 2007
$’000
Current Assets
Non Current Assets
Total Assets
67,804
133,992
201,796
83,622
131,786
215,408
107,018
80,571
187,589
101,419
37,001
138,420
72,538
36,041
108,579
Current Liabilities
Non Current Liabilities
Total Liabilities
62,035
86,168
148,203
53,789
85,092
138,881
63,493
127,989
191,482
151,005
55,068
206,073
141,313
51,177
192,490
Net assets
Equity
53,593
$53,593
76,527
$76,527
(3,893)
$(3,893)
(67,653)
$(67,653)
(83,911)
$(83,911)
The significant trend from the above figures is the declining asset values as the result
of write downs or disposals together with a dramatic increase in liabilities resulting in a
negative equity position from 2005. This can be shown further in the graph below:
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ETW Consolidated Assets and Liabilities
2003 to 2007
250
200
150
100
$'millions
50
0
2007
2006
2005
2004
2003
-50
-100
Assets
Liabilities
Equity
I comment on the Group’s major assets and liabilities as follows:
Receivables
Outstanding receivables as at the date of my appointment were as follows:
Total
$7,531,323
100%
Current
30 days
60 days
$5,305,679
71%
$1,067,695
14%
$929,897
12%
90 days
$61,702
1%
120 day
$166,350
2%
Of the monies outstanding for 60 days and over, $794,139 was owed by the UK
distributor and its Australian related company. Against this, there is amount of
approximately $380,000 owing to these parties by the Group which are intended to be
set off.
We have been advised by the Receivers and Managers that some monies have since
been received, however it is expected that some of the amounts may prove to be bad
debts.
Inventories
The value of inventories as at 30 June 2007 was $45,241,729 and comprised
packaged and bulk wine at cost.
We have been advised by the Receivers and Managers that the value of stock on hand
as at the date of their appointment was $46,758,242 at cost and this conforms with the
position reported by the directors.
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Leased Vineyard Development
The Group has recorded an asset of $5,744,310 in respect of vineyard developments
on leased properties. The value of this asset is typically written off over the term of the
lease. For creditors I note that this asset has no realisable value.
Property, Plant & Equipment
The written down value of the above assets as at 30 June 2007 is as follows:
Asset
Land & Buildings
Vines
Plant & Equipment
Motor Vehicles
Information Technology
Wine Barrels
Fixtures & Fittings
Leased Goods
Total
$
13,405,256
3,112,221
12,786,129
127,570
109,635
274,036
495,539
3,991,012
$34,301,398
I have not requested current valuations of the Group’s assets as this has been carried
out by the Receivers and Managers as part of their sale process. I have requested
copies of the valuations from the Receivers and Managers and they have declined on
the basis that the information is confidential to their sale process. I will continue to
pursue them for the information but suspect that they will not be prepared to release
this information until after the sale process has been completed.
Leased assets have also been included by the Group in the above figures but no
allowance has been made above for outstanding liabilities against those leases and
consequently, I am unable to assess whether there is any equity in these contracts.
Investments
The Group has a 20% equity in Scott Street Portfolio Inc which is the US distribution
company previously fully owned by the Group. The value of $125k has been attributed
based on the sale price that was achieved for the 80% of the business acquired by
Avanti Fine Wine Selections LLC.
In addition, there are $863,328 in Notes owing to the Group by Avanti Fine Wine
Selections LLC as a result of the terms of the settlement. These notes are repayable
over an 18 month term commencing in February 2008.
Trade Creditors
The outstanding creditors for the group as at the date of my appointment amounted to
$5.826 million.
Grower Payments
Further to the above outstanding trade payables as at 21 August 2007, the records of
the Group disclose that grower payments of $6.841 million remain outstanding.
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Interest Bearing Liabilities
The interest bearing facilities are represented by the following:
$
97,200,000
2,200,131
$99,400,131
ANZ Commercial Bill facility
Hire Purchase & other facilities
Total
All facilities were current as at the date of my appointment.
Other Interest Bearing Liabilities
•
Convertible Unsecured Notes
These notes were initially issued by Cranswick with a rate of 8.25% and were
initially due to mature on 29 October 2004 but as part of the Scheme of
Arrangement agreed between the parties when the Cranswick business was
purchased, the maturity date was extended to 29 October 2007. The amount
presently owing is $20,809,419 which includes $825,000 in interest payable.
(Noteholders have recently met and voted to crystallise their position, resulting in
the remaining interest and principal becoming immediately due as an unsecured
debt.
•
Wine Income Exchange Securities (WInES)
In November 2004, an offer was made to the general public for the sale of reset
convertible preference shares in WInES at $1 per unit. The investment offered a
return of 7.75% per annum.
The investment could be converted into ordinary shares at a 5% discount to the
ordinary shares subject to certain terms.
In terms of the prospectus, the company could reset the terms of the investment
with first rest date being 30 August 2009. It was up to the company to select future
reset dates.
The group’s Converting Preference shareholders were also offered the opportunity
to convert or exchange their shares for these units.
The present liability outstanding is $30,079,493.
Working Capital Position
The working capital position of the Group as disclosed in the published accounts and in
the 2007 draft accounts is tabled below:
Current Assets
Current Liabilities
Working Capital/(Deficiency)
Working Capital Ratio
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30 June
2003
$’000
67,804
(62,035)
$5,769
109%
30 June
2004
$’000
83,622
(53,789)
$29,833
155%
Page 32
30 June
2005
$’000
107,018
(63,493)
$43,525
168%
30 June
2006
$’000
101,419
(151,005)
$(49,586)
67%
30 June
2007
$’000
72,538
(141,313)
$(68,775)
51%
8 October 2007
Section 439A(4)(a) Report by Administrators
Due to the Group’s banking facilities expiring on 31 December 2007 all banking
facilities are shown as current liabilities in the analysis above.
The above figures reflect a serious deterioration in the working capital position from
the 2005 financial year to the 2006 financial year and the position deteriorated
further in 2007. The working capital position significantly diminished between the
twelve (12) month period of 30 June 2005 to 30 June 2006. A review of the Group’s
financial statements during this period disclosed that this decrease was mainly
attributable to increased current liabilities including current interest-bearing loans
and borrowings. It was one of the main focuses of the Group’s board in recent
times to try to restructure these liabilities to the ANZ and so secure the ongoing
operational and financial health of the Group.
Given the lack of working capital available to the Group in recent years, and in
particular the significant deterioration from 2005 to 2006 further funding was
required and approved by ANZ to the Group.
5.
STATEMENT OF POSITION
5.1
Book Values as at 30 June 2007
I have summarised the book value of the Group’s assets from management accounts as at
30 June 2007 and taken into account the Group’s estimated liabilities.
Book Value 30/06/07
$'000
Total Floating Charge Assets (at cost)
Less: Priority Claims
Surplus of floating charge assets
Fixed Charge Assets (at cost)
Total Funds Available to Secured Creditor
Less: Secured Creditors
Shortfall after Secured Creditor
Total unsecured claims
Wine Income Exchange Securities (WInES)
70,833
3,758
67,075
43,370
110,445
110,812
(367)
48,665*
$(49,032)
30,080**
Surplus /( Deficit)
$(79,112)
* Includes $20,809,419 with respect to Convertible Note Holders who rank equally with Unsecured Creditors
** WInES holders rank ahead of ordinary shareholders and after all creditors in the event of a liquidation.
As mentioned above, I am unable to provide any estimate of the current market values as
the Receivers and Managers are not prepared to release this information due to their
attempts to sell the business.
I have excluded the value of leased assets and the lease vineyard development for the
reasons as mentioned above.
The Receivers and Managers have agreed to pay all of the preferential claims of
employees.
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While the above figures are not current market values, they also do not take into
consideration any selling costs and the Receivers and Managers remuneration and
expenses which rank ahead of any other claims. Based on the above figures, there are
insufficient assets to clear the secured creditor’s debts and therefore it is unlikely that there
will be any monies available for any other class of creditor or shareholders.
5.2
Statement by Directors
Section 438B of the Act requires the directors to give an Administrator a statement about
the company’s business, property, affairs and financial circumstances which I have
received.
In the Statement, the directors detailed the group’s assets and liabilities at book value
including intercompany. The following table summarises the assets described in the
directors’ Statement as at 20 August 2007.
Asset
Interest in Land
Sundry Debtors
Cash on Hand
Inventory
Work in Progress
Plant & Equipment
Investments
Other Assets
Net Book Value
$
6,390,000
157,916,762
(1,437,720)
46,758,242
(1,150,446)
26,126,298
16,095,022
835,314
Estimated
Realisable Value $
Unknown
16,775,418
6,175,120
Unknown
Unknown
Unknown
500
Unknown
$251,533,472
$22,951,038
Totals
From the above, the Directors have been unable to estimate the present value of some
assets. The variances between the Book Value and Estimated Realisable Value are due to
the removal of intercompany transactions.
5.3
Receipts and Payments in Administration
There have been no receipts of payments in the administration to date.
6.
CAUSES OF FAILURE
6.1
The directors’ causes of failure
The directors of the Group consider the following to be causes of failure of the Group and
have stated the following in their Statement of the Group’s affairs:
•
The directors of the Group, by means of the Board and also through a specifically
appointed Restructure Sub-Committee, have been engaged for some 18 months in
attempts to restructure all essential divisions of the Group’s business and to
restructure the ANZ’s debt position.
•
The Board secured the ongoing support of the Group’s bankers, ANZ, for the
period taken to undertake the required restructure.
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6.2
•
Several restructure proposals were considered but none were completed. As at
August 2007, the latest restructure proposal being considered involved an offer for
merger by way of scheme of arrangement from Pendulum Capital Pty Ltd and
McWilliams Wines Pty Ltd. A Heads of Agreement was executed, but the Group
received notice that certain conditions had either failed or looked to be incapable of
being achieved.
•
On Friday, 17 August 2007, the Board received a letter from ANZ stating in part,
that “given the now anticipated failure of the financial restructure, ANZ advises that
it is no longer able to continue its financial support for ETW. Accordingly, ANZ
advises that no further facilities will be made available and no existing facilities will
be renewed or rolled over following expiry”. The Board met immediately. The Board
took legal advice from Deacons and contacted Mr Martin Jones from Ferrier
Hodgson to discuss the various options available.
•
The Board decided that under these circumstances there was no realistic possibility
that the Group could meet its debts as and when they fell due if no other realistic
and achievable restructure option was immediately sourced. The Chairman
received telephone advice from a former competing bidder (Ferngrove Winery) that
his company was working over the weekend to put together such an alternative
option.
•
The ASX was notified on 17 August 2007 and all Group securities were placed in a
trading halt.
•
The Board met again at 10.00 am on Monday, 20 August 2007. No formal renewed
restructure proposal had been received from Ferngrove Vineyards.
•
At 2.00 pm on the same day, the Board met again and received advice from
Ferngrove that no alternative restructure plan would be put, principally because
Ferngrove had held discussions with ANZ and decided that their proposal would
not be favourably met.
•
At 2.55pm, Martin Jones was asked to join the Board meeting and based on there
being no realistic restructure proposal currently available to the Company and no
change in position from ANZ as regards the discontinuation of financial support, the
Board formed the view that the Group was insolvent.
•
The Board subsequently resolved to appoint Mr Martin Jones and Mr Bruce Carter
as Joint and Several Administrators of the Company and its Australian Group
subsidiaries on 20 August 2007.
•
The ANZ Bank subsequently appointed Mr Peter Anderson, Mr Andrew Birch and
Mr Shaun Fraser, of McGrath Nicol, as Receivers and Managers to the Company
and its Australian Group subsidiaries on 21 August 2007.
The Administrators’ causes of failure
Given the short time between my appointment and the preparation of this report, I have
been able to only carry out preliminary investigations into the Group.
My investigations have been hampered further by the following issues:
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1. The presence of the Receivers and Managers managing the day to day operations
of the business, although I note that I have received good access to the Group’s
books and records by the Receivers and Managers;
2. The inability to access the accounting records of the Group prior to 1 July 2004 due
to a change in accounting software and the current staff being unaware how to
access or locate this information; and
3. The relatively short tenure of the existing staff at the Group who for the majority
have joined post transition to the new accounting system and have no knowledge
of the old system.
My investigations into the Group are ongoing however my preliminary investigations have
identified the following issues which appear attributable to the demise of the Group:
Failure of Business Acquisitions
Whilst the Group was successful in acquiring a number of major businesses such as Scott
Street Portfolio Inc in March 2002, Cranswick Wines in March 2003 and Wine Source in
July 2004, it appears to have been unable to successfully integrate these business
operations into the Group’s existing operations. Following these acquisitions, as detailed
above, the Group incurred significant trading losses commencing in 2005. I am currently
attempting to source documents to investigate and review the impact that each of the
underlying businesses acquired above had on the overall performance of the Group as a
whole, however my initial indications are that the businesses were overvalued, delivered
too little and the cost of servicing the debt required to affect the purchase has been a
major contributor to the Group’s failure.
Poor Inventory Management
In August 2005, the Advisor identified that the Group did not have an adequate sales and
operations planning process which resulted in a lack of inventory management and
consequently a high level of inventory holdings. We note that the Group also stated in its
2004/2005 financial report that it was committed to reducing its inventory levels. However,
given the then current industry conditions (oversupply of grapes) the Group found this
difficult to achieve without heavily discounting wine prices.
We note that within the last 18 months, a comprehensive sales and operational planning
procedure has been implemented which has allowed a much stronger management of the
supply and demand balance.
Poor Forecasting and Budgeting
Whilst the Group prepared monthly forecasts, the actual results consistently differed
significantly to that forecast. It does not appear as though the Group was preparing
reasonable and achievable forecasts based on its operating conditions at certain times.
The Advisor also reported to the Board that the Group had a poor forecasting function and
that there was a lack of understanding by the Group of its accounting function. Inaccurate
accounts payable transactions were also highlighted as an area for concern.
In our preliminary view, the problems with the accuracy of financial information within the
Group, whether in forecasting or in compiling actual results, have been endemic. It would
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8 October 2007
Section 439A(4)(a) Report by Administrators
have been difficult for the Board to plan a strategy to turnaround the business in the face of
inaccurate financial information. It would have been equally difficult for any potential
acquirer of the business to conduct meaningful financial due diligence.
Lack of Strategic Management within the Group
Board minutes from August 2005 state that the Group’s general managers did not
previously believe they had the ability to express their views on the operations of the
Group to the Board. At this time, the Advisor also stated that there was a lack of strategy
and that the Group had too many people which were not leading to sales. It was further
noted at a Board meeting in July 2005 that the Finance Department was not receiving
appropriate direction. Problems within the Finance Department have been addressed
previously above and in the section immediately below. It appears that there has been a
breakdown of effective communication between the Board and the executives of the Group
resulting in a lack of communication from executives to the Board.
With the very significant changes to the Board of Directors, a new Chairman, and the
appointment of a new CEO and management group in the last 18 months, there has been
a change in this state of affairs and a renewed emphasis on strategic management with
the Group.
High Turnover of Key Staff within the Group
For significant periods of time, the Group has operated without a Chief Financial Officer
and has had 5 different Chief Financial Officers in the last 3 years. There has been a
corresponding negative impact within the finance team and a high turnover of key staff
within such as the position of financial controller. Other general manager positions in sales
and marketing have also experienced high turnover. Staff morale and retention of staff was
identified as a problem in July 2005. The loss of ‘internal’ knowledge appears to have
hampered the Group’s operations and its attempts at implementing a restructuring of the
business. In addition there appears a strong indication that the inadequacy of financial
information may have had a serious impact on the Board’s ability to carry out a
restructuring process.
A new CEO, CFO and Executive General Manager of Operations did bring internal stability
to the management group within the last 18 months.
Inadequate Wine Sales Revenue Generated
The Group was unable to achieve its forecast sales levels in recent years. A countrywide
oversupply of grapes during 2005/2006 resulted in the heavy discounting of wines
throughout Australia which had a detrimental impact on the Group. The difficult industry
conditions and record wine glut directly contributed to operating revenue falling by 16% to
$80.8 million in 2005/2006.
Poor Management of Accounts Receivable
The Group’s actual debtor collections were significantly less than that forecast in recent
times, indicating a problem with management of accounts receivable. A report prepared by
the Advisor and outlined at a Board meeting in October 2005 stated that there appeared to
be an attitude or cultural problem in the collection of debtors and it was their view that
professional assistance was required in the short-term for this area to improve. Pioneer
Credit were engaged in October 2005 to assist in this process.
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Subsequent changes to the management and staffing of accounts receivable has seen a
strong improvement in collections and debtor days.
7.
STATUTORY INVESTIGATIONS
7.1
Nature and Scope of Review
7.1.1
Overview
A pre-cursor to the recovery of funds by a Liquidator through the voiding of certain
transactions or through other legal action, such as seeking compensation from directors for
insolvent trading, is establishing the company’s insolvency at the relevant time.
Establishing insolvency is a complex matter due in part to the complexity of corporate
financial transactions and the lack of clear prescriptive legal authority on proof of
insolvency.
Notwithstanding, there are two primary tests used in determining a company’s solvency at
a particular date; namely:
ƒ
Balance sheet test; and
ƒ
Cash flow or commercial test.
The Courts have widely used the cash flow or commercial test in determining a company’s
solvency at a particular date.
Section 95A of the Act also contains a definition of solvency. That definition reflects the
commercial test in stating that a person is solvent if “the person is able to pay all the
person’s debts as and when they become due and payable”.
However, the commercial test is not the sole determinant of solvency. Determining
solvency derives from a proper consideration of a company’s financial position in its
entirety and in the context of commercial reality. Relevant issues include, but are not
limited to, the following:
ƒ
The degree of illiquidity. A temporary lack of liquidity is not conclusive;
ƒ
Regard should be had to:
¾
¾
cash resources; and
monies available through asset realisations, borrowings against the security of
assets or equity/capital raising.
ƒ
All a company’s assets might not be relevant when considering solvency. For
example, where a company proposes selling assets which are essential to its
business operations, the proceeds of those assets should not be taken into account.
ƒ
The voluntary and temporary forbearance by creditors not to enforce payment terms;
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8 October 2007
Section 439A(4)(a) Report by Administrators
ƒ
It is not appropriate to base an assessment of whether a company can meet its
liabilities as and when they fall due on the prospect that a company might trade
profitably in the future.
In summary, it is a company’s inability using such resources as are available to it through
the use of its assets, or otherwise, to meet its debts as they fall due, which indicates
insolvency.
7.1.2
Preliminary Determination
Set out below is a summary of my preliminary investigations and my preliminary
determination as to the Group’s solvency based on information readily available to me.
This area requires more work by a Liquidator (if one is ultimately appointed) before I will be
in a position to form a definitive opinion.
The solvency review has been conducted on consolidated basis where possible given that
the:
1. The entities of the Group which are under administration entered into a Deed of
Cross Guarantee as a condition to obtaining relief under ASIC Class order 98/1418
from the Act’s requirements to prepare and lodge an audited financial report and a
director’s report.
2. The Group as a whole had a commercial bill facility, overdraft facility and FDA
facility available from ANZ.
7.1.3
Bank Facilities
A review of the Group’s overdraft and commercial bill facilities for the period 1 July 2005 to
21 August 2007 is tabled below:
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8 October 2007
Section 439A(4)(a) Report by Administrators
Month
Bill Facility Limit
$’000
July 05
August 05
September 05
October 05
November 05
December 05
January 06
February 06
March 06
April 06
May 06
June 06
July 06
August 06
September 06
October 06
November 06
December 06
January 07
February 07
March 07
April 07
May 07
June 07
July 07
August 07
Month
July 05
August 05
September 05
October 05
November 05
December 05
January 06
February 06
March 06
April 06
May 06
June 06
July 06
August 06
September 06
October 06
November 06
December 06
January 07
February 07
March 07
April 07
May 07
June 07
July 07
August 07
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96,500.0
96,500.0
96,500.0
96,500.0
96,500.0
108,500.0
108,500.0
108,500.0
108,500.0
108,500.0
108,500.0
115,000.0
115,000.0
115,000.0
90,700.0
95,700.0
95,700.0
95,700.0
95,700.0
95,700.0
95,700.0
94,700.0
94,700.0
97,200.0
97,200.0
97,200.0
Overdraft
Facility Limit
$’000
Bill Facility
Drawn
Amount
$’000
1,508.5
662.1
1,631.3
1,307.8
1,307.8
1,053.1
744.4
1,462.1
866.6
1,545.1
1,557.4
1,806.4
2,035.3
1,985.0
2,179.7
2,103.9
2,094.0
1,635.3
2,170.8
2,210.7
2,176.5
2,537.5
4,882.7
2,303.7
1,497.7
2,424.5
Page 40
3,000.0
1,000.0
500.0
12,000.0
8,500.0
8,500.0
4,000.0
2,500.0
4,000.0
500.0
24,200.0
1,500.0
1,000.0
1,000.0
1,000.0
1,000.0
1,000.0
-
93,500.0
95,500.0
96,000.0
96,500.0
96,500.0
96,500.0
100,000.0
100,000.0
104,500.0
106,000.0
108,500.0
111,000.0
114,500.0
90,800.0
90,700.0
94,200.0
94,700.0
94,700.0
94,700.0
94,700.0
94,700.0
94,700.0
94,700.0
97,200.0
97,200.0
97,200.0
Overdraft
Drawn Amount
$’000
2,000.0
2,000.0
2,000.0
2,000.0
2,000.0
2,000.0
2,000.0
2,000.0
2,000.0
2,000.0
2,000.0
2,000.0
2,300.0
2,300.0
2,300.0
2,300.0
2,300.0
2,300.0
2,300.0
2,300.0
2,300.0
2,300.0
2,300.0
2,600.0
2,600.0
2,600.0
Undrawn
Amount
$’000
Undrawn
Amount
$’000
491.5
1,337.9
368.7
692.2
692.2
946.9
1,255.6
537.9
1,133.4
454.9
442.6
193.6
264.7
315.0
120.3
196.1
206.0
664.7
129.2
89.3
123.5
237.5
2,582.7
296.3
1,102.3
175.5
FDA Facility
(Fully Drawn)
$’000
300.0
300.0
300.0
300.0
300.0
600.0
600.0
600.0
600.0
600.0
600.0
300.0
300.0
300.0
300.0
300.0
300.0
300.0
300.0
300.0
300.0
300.0
300.0
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8 October 2007
Section 439A(4)(a) Report by Administrators
An overall summary of all bank facilities available and utilised for the period 1 July 2005 to
21 August 2007 is tabled below:
Month
July 05
August 05
September 05
October 05
November 05
December 05
January 06
February 06
March 06
April 06
May 06
June 06
July 06
August 06
September 06
October 06
November 06
December 06
January 07
February 07
March 07
April 07
May 07
June 07
July 07
August 07
Total Facility
Limit
$’000
98,800.0
98,800.0
98,800.0
98,800.0
98,800.0
111,100.0
111,100.0
111,100.0
111,100.0
111,100.0
111,100.0
117,300.0
117,600.0
117,600.0
93,300.0
98,300.0
98,300.0
98,300.0
98,300.0
98,300.0
98,300.0
97,300.0
97,300.0
99,800.0
99,800.0
99,800.0
Total Facility
Drawn Amount
$’000
95,308.5
96,462.1
97,931.3
98,107.8
98,107.8
98,153.1
101,344.4
102,062.1
105,966.6
108,145.1
110,657.4
113,106.4
116,835.3
93,085.0
93,179.7
96,604.0
97,094.0
96,635.3
97,170.9
97,210.8
97,176.5
97,537.5
99,882.7
99,503.7
98,697.7
99,624.5
Total Undrawn
Amount
$’000
3,491.5
2,337.9
868.7
692.2
692.2
12,946.9
9,755.6
9,037.9
5,133.4
2,954.9
442.6
4,193.6
764.7
24,515.0
120.3
1,696.0
1,206.0
1,664.7
1,129.1
1,089.2
1,123.5
(237.5)
(2,582.7)
296.3
1,102.3
175.5
The above summary is also graphed below:
ETW Group - ANZ Debt and Facility Limits
(Amount in $'000s)
150,000
100,000
50,000
Ju
l-0
Se 5
p0
N 5
ov
-0
5
Ja
n06
M
ar
-0
M 6
ay
-0
6
Ju
l-0
Se 6
p06
N
ov
-0
6
Ja
n07
M
ar
-0
M 7
ay
-0
7
Ju
l-0
7
0
Drawn Facility Amount
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Month
Undrawn Facility Amount
Page 41
8 October 2007
Section 439A(4)(a) Report by Administrators
The Group also had a number of other facilities with the ANZ, however the overdraft and
commercial bill facilities were the main facilities used to fund the Group’s continuing
operations. I summarise below the total facilities available to the Group from ANZ:
Total Facility Limit
$’000
2,600
97,200
3,030
1,292
3,149
160
1
3,380
$110,812
Facility
Bank Overdraft
Commercial Bills
Foreign Exchange
Performance Guarantees
Payroll
Business Credit Cards
Other
Lease / Hire Purchase
Total
Total facilities available to the Group with ANZ as at 21 August 2007 were $110.81 million.
The analysis above discloses that the Group was close to full utilisation of its bank facilities
for most month’s for the period 1 July 2005 to 21 August 2007. This would suggest that the
Group was unable to generate surplus cash flow from trading activities to reduce the
balance of its bank facilities. During the period January 2006 to July 2006 the
indebtedness of the Group increased. This is largely due to the fact that the ANZ had
agreed to fund operating losses during this time on the understanding that proceeds from
the sales of the Griffith and Mildura Wineries would be used to repay this additional
funding.
The Group’s facility limits were exceeded in April 2007 and May 2007, however a
temporary extension above facility limits at the time was granted by ANZ. Further a
moratorium on interest and fees on loans to the Group was granted by ANZ from April
2006 which has been quantified to be approximately $15.0 million.
7.1.4
Aged Trade Payable Analysis
We have conducted an ageing of trade payables outstanding as at 21 August 2007 which
excludes inter-company payables from the Group’s records.
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8 October 2007
Section 439A(4)(a) Report by Administrators
The ageing is as follows:
Total
$000’s
ETW
Trade creditors as at 21 August 2007
Percentage of Total
OV
Trade creditors as at 21 August 2007
Percentage of Total
SVS
Trade creditors as at 21 August 2007
Percentage of Total
WSNSW
Trade creditors as at 21 August 2007
Percentage of Total
WSQLD
Trade creditors as at 21 August 2007
Percentage of Total
WSVIC
Trade creditors as at 21 August 2007
Percentage of Total
WSWA
Trade creditors as at 21 August 2007
Percentage of Total
WSH
Trade creditors as at 21 August 2007
Percentage of Total
Total Group Creditors as at 21
August 2007
Total Percentage
August 07
$000’s
July 07
$000’s
June 07
$000’s
Pre-June 07
$000’s
3,026.4
100.0%
1,664.5
55.0%
395.1
13.0%
438.9
14.5%
527.9
17.5%
75.8
100.0%
26.9
35.5%
48.9
64.5%
-
-
334.7
100.0%
293.4
87.7%
38.8
11.6%
1.3
0.4%
1.2
0.3%
810.7
100.0%
25.0
3.1%
297.9
36.7%
307.4
37.9%
180.4
22.3%
558.7
100.0%
265.5
47.5%
147.6
26.4%
143.9
25.8
1.7
0.3%
786.8
100.0%
87.5
11.2%
182.0
23.1%
203.8
25.9%
313.5
39.8%
91.7
100.0%
5.4
5.9%
19.4
21.1%
33.9
37.0%
33.0
36.0%
141.6
100.0%
-
52.6
37.1%
49.1
34.7%
39.9
28.2%
$5,826.4
100.0%
$2,368.2
40.6%
$1,182.3
20.3%
$1,178.3
20.2%
$1,097.6
18.9%
The records of the Group disclose that the following entities did not have any outstanding
trade creditors (excluding inter-company payables) as at 21 August 2007:
•
•
•
•
•
•
•
•
•
•
APW;
AWT;
CP;
ETUSA;
ETV;
IW;
IP;
RW;
SW; and
SP.
A graph depicting the consolidated ageing with respect to trade payables of the Group is
shown below:
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8 October 2007
Section 439A(4)(a) Report by Administrators
(In $'000s)
ETW Group - Aged Creditor Analysis
2,500
2,000
1,500
1,000
500
0
Aug-07
Jul-07
Jun-07
Pre Jun 07
Month Incurred
Group Aged Creditor Analysis
The above analysis discloses that the majority of the Group’s trade payables outstanding
as at 21 August 2007 were current. The analysis discloses that 40.6% of the trade
payables were incurred in August 2007, with 20.3% in July 2007 and 20.2% in June 2007.
A further 18.9 % of total credit outstanding at the date of appointment of Administrators
was incurred prior to June 2007.
I note that the trade payables figure is subject to change following the formal adjudication
of creditor claims.
7.1.5
Outstanding Grower Payments
Separate to the above analysis of outstanding trade payables as at 21 August 2007, the
records of the Group disclose that the following grower payments remain outstanding and
are aged as follows:
Month
Amount
$’000
337.7
727.1
955.2
1,089.1
1,881.3
965.2
885.5
$6,841.1
February 2007
March 2007
April 2007
May 2007
June 2007
July 2007
August 2007
Total
%
4.9%
10.6%
14.0%
15.9%
27.5%
14.1%
13.0%
100.0%
The Group advises that grower payments are commonly made in staged (3 or 4 tranches
in a vintage year) or monthly instalments to growers. They go on to advise that at 30 June
2007 all agreed Grower payments had been met. It appears that subject to enquiry, that
amounts recorded as outstanding in the above table were not due and payable at 30 June
2007.
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8 October 2007
Section 439A(4)(a) Report by Administrators
7.1.6
Leasing Payments
The Group has a number of hire purchase, finance and operating leases with various
entities. The majority of these leases were paid monthly in advance via direct debit and as
such there were no outstanding leasing commitments which related prior to 21 August
2007. It is noted that the records of the Group disclose future leasing commitments of
approximately $5.1 million.
7.1.7
Dividends Paid to Shareholders
The following dividends have been paid by ETW:
Dividend Type
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Final
Interim
Cents Per
Share
2.25
2.00
2.00
2.00
2.00
2.00
2.00
1.90
1.90
1.60
3.70
Franked %
100
100
100
100
100
100
100
100
34
100
100
Ex-Dividend Date
24 March 2005
27 September 2004
26 March 2004
24 September 2003
18 March 2003
17 September 2002
18 March 2002
14 September 2001
16 March 2001
15 September 2000
27 March 2000
As you will note above, no dividends have been declared to shareholders since March
2005. The March 2005 dividend of 2.25 cents per share to ordinary shareholders was paid
following ETW reporting a record profit of $3.7 million for the six months ending 31
December 2004. ETW would go on to announce a full year loss of $49.8 million which was
subsequently restated in 2006 under IFRS to a loss of $73.7 million.
As a result of this it would appear that the December 2004 results were at the very least
inaccurate. The payment of this dividend remains an area of my further ongoing
investigations.
7.1.8
Recovery Actions by Creditors
The directors of the Group advise that Australian Beverage Distributors made a claim in
the NSW Court regarding an outstanding account, however this was settled by mutual
agreement. Management of the Group advise that no other formal demands, writs or
summons were issued against the Group by trade creditors prior to the Group being
placed into Administration.
Credit searches have been conducted on each of the entities of the Group to confirm this.
Management of the Group advise that no written payment plans were agreed or in force
with any trade creditors prior to the Group being placed into Administration. However,
management of the Group advise that an informal daily repayment arrangement was in
force with the ATO and had been in place for approximately two years prior to my
appointment.
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8 October 2007
Section 439A(4)(a) Report by Administrators
7.1.9
Financial Performance of Operating Entities
The net profit / (loss) of the Group for the period 30 June 2003 to 30 June 2007 is tabled
below;
30 June 2003
$’000
30 June 2004
$’000
30 June 2005
$’000
30 June 2006
$’000
$4,431
$7,624
$(73,748)
$(63,850)
Net Profit (Loss)
30 June 2007
$’000
$(29,745)
The Group incurred significant trading losses during the years 2005 to 2007. Dividends
totalling 4.25 cents per share from 2004 profits were paid to shareholders during the 2005
financial year. However, as no further profits were generated by the Group from 2005 no
further dividends were available for distribution to shareholders.
7.1.10 Consolidated Working Capital position of the Group
The working capital position of the Group for the period 30 June 2003 to 30 June 2007 is
tabled below:
Current Assets
Current Liabilities
Working Capital/(Deficiency)
Working Capital Ratio
30 June
2003
$’000
67,804
(62,035)
$5,769
109%
30 June
2004
$’000
83,622
(53,789)
$29,833
155%
30 June
2005
$’000
107,018
(63,493)
$43,525
168%
30 June
2006
$’000
101,419
(151,005)
$(49,586)
67%
30 June
2007
$’000
72,538
(141,313)
$(68,775)
51%
Due to the Group’s banking facilities expiring on 31 December 2007 all banking facilities
are shown as current liabilities in the analysis above.
The above figures reflect a serious deficit in working capital from the financial year 2005 to
2006 and the position deteriorated further in 2007. The working capital position
significantly diminished between the twelve (12) month period of 30 June 2005 to 30 June
2006. A review of the Group’s financial statements during this period disclosed that this
decrease was mainly attributable to increased current liabilities including current interestbearing loans and borrowings.
7.1.11 Forecasts prepared by Group management
We have reviewed various Board meeting files and minutes of the Group of which included
a review of budgeted versus actual (but unaudited) management profit and loss forecasts
prepared by the Group. We table below budgeted versus actual results reported and
tabled to the Board of the Group for the periods ending 30 June 2005, 30 June 2006 and
31 May 2007:
Net Revenue
COGS
Gross Profit
Other Income
Expenses
EBIT
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Budget
2005
$’000
117,160
(65,922)
51,238
1,135
(36,116)
$16,257
Unaudited
Actual
2005
$’000
96,383
(60,039)
36,344
1,999
(26,860)
$11,483
Page 46
Variance
2005
$’000
(20,777)
5,883
(14,894)
864
9,256
$4,774
Budget
2006
$’000
104,913
(70,020)
34,893
1,075
(32,975)
$2,993
Unaudited
Actual
2006
$’000
81,019
(62,537)
18,482
3,223
(98,125)
$(76,420)
Variance
2006
$’000
(23,894)
7,483
(16,411)
2,148
(65,150)
$(79,413)
8 October 2007
Section 439A(4)(a) Report by Administrators
Net Revenue
COGS
Gross Profit
Other Income
Expenses
EBIT
Budget
To May
2007
$’000
83,355
(54,625)
28,730
2,605
(31,654)
$(319)
Unaudited
Actual
To May
2007
$’000
68,163
(44,617)
23,546
3,441
(26,929)
$58
Variance
To May
2007
$’000
(15,192)
10,008
(5,184)
836
4,725
$377
The forecast figures above disclose that for the financial years 2005 and 2006 the Group
did not track to budget and incurred significant variances to its forecast cash flow. The
Group was on track to meet its near break-even EBIT forecast for financial year 2007. We
also note that the reported management results as tabled at Board meetings do not match
with the final audited results for each of the above periods.
7.1.12 Forecasts versus actual audited results of the Group
Further to the above, we table below an analysis of the audited results of the Group for the
financial years ending 30 June 2005 and 2006 in comparison to Group forecasts:
Net Revenue
COGS
Gross Profit
Other Income
Expenses
EBIT
Budget
2005
$’000
117,160
(65,922)
51,238
1,135
(36,116)
$16,257
Audited
Actual
2005
$’000
96,383
(58,367)
38,016
7,172
(125,253)
$(80,065)
Variance
2005
$’000
(20,777)
7,555
(13,222)
6,037
(89,137)
$(96,322)
Budget
2006
$’000
104,913
(70,020)
34,893
1,075
(32,975)
$2,993
Audited
Actual
2006
$’000
80,774
(57,005)
23,769
6,876
(94,495)
$(63,850)
Variance
2006
$’000
(24,139)
13,015
(11,124)
5,801
(61,520)
$(66,843)
Please note that audited results have not been completed for the 2007 financial year.
The analysis above discloses that the audited results of the Group for the financial years
ended 2005 and 2006 in comparison to the budgeted figures by the Group vary
significantly. Further, the audited actual results in 2005 disclose a significant variance to
the management results reported to the Board in July 2005 prior to the results being
audited. This suggests that there were significant problems with the Group’s reporting and
record keeping during that period and I am conducting further investigations as to why
there was a significant difference between management and audited results for the years
above.
7.1.13 Payment of statutory commitments
The Group’s records disclose that the following amounts were outstanding as at 31 July
2007 with respect to statutory payments:
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Item
BAS Return
Fringe Benefits Tax
GIC
PAYG Tax
Payroll Tax
WET Rebate Due
Witholding Tax
Total
ETW
$’000
(31.1)
(64.2)
687.5
(0.9)
(7.0)
1.5
$585.7
OVPL
$’000
Item
BAS Return
Fringe Benefits Tax
GIC
PAYG Tax
Payroll Tax
WET Rebate Due
Witholding Tax
Total
WSHPL
$’000
62.3
$62.3
WSNSWPL
$’000
310.8
-
(1.9)
9.1
$7.2
$310.8
Item
BAS Return
Fringe Benefits Tax
GIC
PAYG Tax
Payroll Tax
WET Rebate Due
Witholding Tax
Total
SVSPL
$’000
(4.5)
$(4.5)
ETPWPL
$’000
(22.5)
1.7
(17.4)
$(38.2)
APWPL
$’000
WSQLDPL
$’000
156.8
$156.8
WSVICPL
$’000
38.0
$38.0
WSWAPL
$’000
326.4
$326.4
2.4
0.5
(53.1)
$(50.1)
Group Basis
$’000
836.2
(64.2)
685.6
11.5
1.3
(77.5)
1.5
$1,394.4
The Group’s Management advise that the above amounts outstanding for the BAS Return,
PAYG, Payroll tax and Witholding tax relate to the month of July 2007.
Further the Group’s management advise that the General Interest Charge (“GIC”) of
$687.5k for ETW relates to outstanding BAS returns from several years ago and that Ernst
and Young are currently assisting the Group in seeking to have this charge revoked by the
Australian Taxation Office (“ATO”). At the time of preparing this report insufficient
documentation was at hand to complete an ageing of the GIC as full running balance
account statements are required to be supplied by the ATO.
7.1.14 Sources and Applications of Funds
During the past several financial years, the Group had four (4) main sources of funds with
which to draw on. These were:
1.
2.
3.
4.
Capital Raising;
Asset Sales;
Banking Facilities; and
Trading Income
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Capital Raising
Private Placement – Capital Raised $11.0 million
In August 2004, ETW raised $11.0 million via a private placement of 11 million reset
convertible preference shares (entitled Wine Income Exchange Securities “WInES”) to
Professional and Sophisticated Investors.
The WInES have an issue price of $1.00 per share and a preferential non-cumulative fully
franked dividend of 7.75%, grossed up to the extent unfranked subject to a maximum of
10%. The proceeds of the WInES were planned to be used to retire bank debt principally
incurred from ETW’s recent acquisitions. The placement of WInES was co-led by ANZ and
Bell Potter Securities.
Public Offering – Capital Raised $12.0 million
In December 2004, ETW raised a further $12.0 million via a public offering for the issue of
WInES. The WInES had an issue price of $1.00 per share and a preferential noncumulative fully franked dividend of 7.75%, grossed up to the extent unfranked subject to a
maximum of 10%. The proceeds of the WInES were planned to be used to retire bank
debt.
Asset Sales
In recent years, consistent with the Group’s turnaround strategy the Group sold a number
of operating assets including;
•
•
•
the Mildura Winery for $22 million in August 2006;
the Griffith Winery for $8 million in August 2006; and
Its 80% interest in Scott Street Portfolio Inc for US $400k in March 2007.
These funds were predominantly used to repay temporary facilities advanced by ANZ to
fund trading losses.
Trading Income
The impact of income to service the current liabilities of the Group is detailed above.
There was insufficient net income being derived from the Group’s core business during the
nine (9) months prior to the appointment of Administrators to assist in servicing current
liabilities that become due and payable.
7.1.15 Likely Date of Insolvency
Indicators
Ageing of Trade Payables
Working Capital
Profit and Loss Statements
Statutory Payments
Demands, Writs & Summons
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Estimated Date
July 2007
June 2006
June 2005
August 2007
n/a
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Ageing of Trade Payables
Given that 18.9% of the Group’s trade payables are at least over 82 days old (incurred at
latest in June 2007) it is arguable that this indicates that the Group was unable to pay
these debts in the normal course of trade at latest in July 2007.
Working Capital
A review of the working capital position between the period 30 June 2005 and 30 June
2006 shows a significant decrease in the working capital position of the Group. This
position worsened in the 2007 financial year.
Profit and Loss Statements
The Group experienced significant losses from 1 July 2005 to 30 June 2007. A loss of $80
million was experienced for the financial year ending 30 June 2005 and no profits have
been made by the Group subsequent to this period.
Statutory Payments
The Group’s records and advice from Group Management indicate that statutory payments
were being made on time by the Group. Aside from the GIC charge as discussed above,
the outstanding statutory payments relate to the month of July 2007.
Writs, Demands and Summons
Credit searches conducted do not disclose any writs, demands of summons issued against
the Group other than the claim made by Australian Beverage Distributors in the NSW
Court which was settled by mutual agreement. This is consistent with advice received from
Group Management.
My investigations have not had the time to progress enough to allow me to determine the
date of insolvency at this juncture. My preliminary view is that there are indicators that the
Group was insolvent from at least July 2007.
There is a potential argument that the Group was insolvent at an earlier date than the
directors’ resolution to appoint Administrators. Certainly it appears that the attempts by
directors to restructure the business and the changes recommended and made under the
advice of the Advisors have not been sufficient to return the Group to profitability.
While the Group has been able to meet most its expenses as they fell due since June
2005, it has only been able to do so with the support of ANZ. In the absence of such
support it is my opinion that the business would surely have failed.
A Liquidator would need to conduct further investigations, and possibly conduct public
examinations of relevant parties, to ultimately determine the date on which the Group
became insolvent.
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7.1.16 Presumption of Insolvency – Inadequate Books and Records
Failure to keep or retain adequate books and records in accordance with Section 286 of
the Act provides a rebuttable presumption of insolvency under Section 588E of the Act. A
Liquidator can rely on the presumption of insolvency in litigation including:
ƒ
Compensation claims arising from insolvent trading; and,
ƒ
Recovery of voidable transactions from related entities.
The presumption cannot be relied upon in the recovery of unfair preference from an
unrelated entity.
My preliminary view is that the Group did maintain adequate books and records in
accordance with Section 286 of the Act.
7.2
Voidable Transactions
7.2.1
Unfair Preferences
A payment to a creditor is preferential if it is made at a time when the company is insolvent
and it results in the recipient receiving a greater return than they would receive if the
payment were set aside and the creditor lodged a claim in the liquidation.
Should a Liquidator establish any such unfair preference payments, these amounts may
be recouped thereby increasing the funds available to ordinary unsecured creditors. If a
creditor disgorges an unfair preference payment to a Liquidator, the creditor is entitled to
prove for dividend. Therefore, whilst recovering an unfair preference increases the pool of
funds available to creditors, it also increases total creditor claims.
Whilst I am advised by the Group’s management that no formal written payment plans
were in place with creditors prior to my appointment and my investigations to date have not
found any such documentation, there are a number of transactions which I have identified
in my preliminary investigations that appear to be of a preferential nature.
7.2.2
Uncommercial Transactions
A transaction is an uncommercial transaction if it is made at a time when the company is
insolvent and it may be expected that a reasonable person in the company’s
circumstances would not have entered into the transaction having regard to:
ƒ
The benefits or detriment to the company of entering into the transaction; and
ƒ
The prospective benefits to other parties to the transaction upon entering into it.
Should a Liquidator establish any such uncommercial transactions, those transactions may
be set aside thereby increasing the funds available to ordinary unsecured creditors.
My preliminary investigations do not disclose any transactions of an uncommercial nature
at present. However, there have been a number of allegations raised by shareholders
regarding potential uncommercial transactions which I am currently investigating.
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7.2.3
Unfair Loans
Section 588FD provides that a loan to a company is unfair if the interest and charges are
extortionate. In considering whether interest and charges are extortionate, regard must be
had to:
ƒ
Risk the lender is exposed to;
ƒ
Value of security;
ƒ
Term;
ƒ
Repayment schedule; and
ƒ
Amount of loan.
Based on my investigations to date, the company was not a party to any unfair loans.
7.2.4
Unreasonable Director-related Transactions
Pursuant to Section 588FDA of the Act, a transaction is an unreasonable director-related
transaction of the company if:
ƒ
The transaction is a payment, transfer of property, issue of securities or incurring of
an obligation by the company; and,
ƒ
Made by the director or close associate of the director;
ƒ
That a reasonable person in the company’s circumstances would not have entered
into having regard to the benefit or detriment to the company or other parties.
Should a Liquidator establish any such transactions, they may be set aside thereby
increasing the funds available to unsecured creditors.
My preliminary investigations do not indicate any transactions of such a nature at present.
A number of director-related transactions took place prior to my appointment of which are
disclosed in the Group’s annual financial reports. There have also been a number of
allegations raised by shareholders regarding potential unreasonable director related
transactions which I am currently investigating.
In particular I note that certain allegations have been raised in respect of the grower
contracts between the Group and entities controlled by Franklin Tate. I have carried out a
preliminary review of these contracts and I am of a view that they are on commercial terms
consistent for the time at which they were entered into. I note however that my
investigations into this area continue.
7.2.5
Obstruction of Creditors’ Rights
Section 588FE of the Act provides for the voiding of transactions designed to defeat, delay
or interfere with creditors rights.
My investigations to date do not disclose any such transactions.
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I note again my earlier comment that in respect of all of the above raised issues, that an
increase in the funds available to creditors as a result of voidable transactions would be
made available to all creditors on a rateable basis.
7.3
Insolvent Trading
7.3.1
Directors’ Liability
Section 588G of the Act imposes a positive duty upon company directors to prevent
insolvent trading. If a director is found guilty of an offence in contravening Section 588G,
the Court may order him or her to pay compensation to the company equal to the amount
of loss or damage suffered by the creditors of the company.
The Court may also impose upon the directors’ one of two types of civil penalty orders.
The first can include a fine not exceeding $200,000 or an order prohibiting directors from
participating in the management of a company. The second, where there is criminal intent
and a conviction, a director could also be imprisoned for up to five years or fined as well.
ASIC usually applies for civil penalty orders while applications for compensation payable to
the company are usually made by a Liquidator or in specified circumstances a creditor.
The substantive elements of Section 588G are:
ƒ
A person must be a director of a company at a time when the company incurs a
debt;
ƒ
The company must be insolvent at that time or becomes insolvent by incurring the
debt;
ƒ
The director must have reasonable grounds for suspecting that the company is
insolvent or would so become insolvent by incurring the debt.
Summarised below are the defences contained in Section 588H:
ƒ
The directors had reasonable grounds at the time the debt was incurred to expect
the company to be solvent and would remain solvent even after the debt was
incurred;
ƒ
The directors relied on another person to provide information about whether or not
the company was solvent;
ƒ
The directors were ill or for some other good reason did not take part in the
management of the company;
ƒ
The directors took reasonable steps to prevent the incurring of the debt.
A Liquidator must form an opinion as to the date the company became insolvent and
determine the debts incurred from that date; thereby quantifying the loss to the company.
To successfully establish an insolvent trading claim, it would have to be established that
the directors knew, or ought to have reasonably known, of the Group’s insolvency, when
the debts subject of the claim were incurred, notwithstanding that:
•
The directors had the accounts of the Group audited for the year ended 30 June
2006 and previous financial years;
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•
The directors were able to obtain capital funding through the share market at
various times;
•
The Group had a restructuring plan in place which ultimately failed;
•
The directors engaged the Advisor to take over the budgeting and forecasting
functions and assist with planning and business efficiency issues; and
•
The directors continued to have the support of the ANZ up to 17 August 2007.
Again, a Liquidator would likely seek legal advice on these issues and conduct more
investigations possibly including a public examination.
The costs of proceeding with an insolvent trading action must be considered as does the
personal financial capacity of the directors to pay a judgement obtained against them.
7.4
Director Duties
Based on preliminary investigations, I have not identified any breaches by the directors of
their statutory or fiduciary duties although I note that the basis for disclosure of the
December 2004 profit and the subsequent declaration and payment of the March 2005
dividend are subject of further ongoing investigations.
7.5
Other Matters Arising from Investigations
I have received various allegations from creditors that funds raised by ETW through the
public capital raising process were either misused, or used for purposes other than that
stated in the prospectus. Chiefly, this relates to two capital raising ventures.
a) ETW Renounceable Rights Issue (12 September 2003) (“the Renounceable Rights
Issue”); and
b) ETW Prospectus for WInES (19 October 2004) (“the WInES Issue”).
The Renounceable Rights Issue aimed to raise $8.163m in total funds, and the WInES
Issue aimed to raise $10.0m, with an allowance for a potential oversubscription of a further
$2.0m. The prospectus’s for both issues clearly stated that the net funds, after the costs of
the capital raising, were to be used to reduce the company’s debt levels.
The prospectus for the Renouncable Rights Issue states that “The money raised … will be
used to reduce existing bank debt levels, provide additional working capital, and to meet
the costs associated with the Rights Issue.” The Prospectus also states that the net
proceeds of funds raised will be applied to debt raised specifically for the Cranswick
acquisition.
Similarly, the prospectus for the WInES Issue states that “the net proceeds from the Public
Offer will be used to reduce bank debt, thereby strengthening the Company’s balance
sheet and increasing its financial flexibility.” The prospectus further states that “The
Directors consider that the repayment of debts from the net proceeds of the funds raised
by this Public Offer will result in an improved debt to equity ratio for the Group.”
In both events, the corporate adviser for the capital raising was the ANZ Investment Bank,
and the underwriters included ANZ Underwriting Ltd and ANZ Securities Ltd, along with
other entities. The expected application of funds raised was advised to potential investors
in the prospectus’s as:
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Application of funds
Renounceable
Rights Issue
12 Sept 2003
$’000
338
7,775
$ 8,163
Expenses of the capital raising
Retirement of interest bearing liabilities
Total funds to be raised
WInES
Issue
19 Oct 2004
$’000
1,045
8,955
$ 10,000
In both instances, the funds raised were invested into the company with the stated
objective of reducing the company’s indebtedness to the bank.
We have not, as at the date of writing, been able to source monthly management accounts
for the period covered by the Renounceable Rights Issue, however we have examined the
debt structure of the company during the period of the WInES Issue. In doing so, we note
that prior to May 2005, interest bearing liabilities appear to be grouped wholly in to the “Net
Borrowings” account, and from May 2005 onwards this is split out.
Application of funds
Net Borrowings (current liability)
Interest Bearing Liabilities
(non-current liability)
Total borrowings / debt
Increase / (decrease) in debt levels
Oct’04
$’000
83,490
-
Nov’04
$’000
85,812
-
Dec’04
$’000
73,577
-
Jan’05
$’000
76,012
-
$ 83,490
$ Nil
$ 85,812
$ 2,322
$ 73,577
$ (12,235)
$ 76,012
$ 2,435
The shares from the WInES Issue were allotted in December 2004. The above shows that
during this period, net borrowings actually decreased by over $12.0m. This suggests that,
prima facie at least, funds raised were put to the intended purpose.
Whilst only preliminary investigations into the use of funds raised has been completed by
me to date, further investigation into this would be conducted if the company is placed into
liquidation to determine whether any offences occurred in relation to this.
Engagement of 333 Performance Management (“the Advisor”)
We note that in May 2005, the Advisor was engaged jointly by ETW and ANZ to perform a
performance management review of ETW for ANZ.
In July 2005, the Advisor was retained by ETW following this initial review to take control of
the budgeting, forecasting and planning of the Group and advise on business efficiency
issues. The Advisor agreed to conduct and operate ETW’s Strategic Review Unit as a
requirement of the ETW Heads of Agreement with ANZ executed in July 2005. Broadly,
the Advisor was engaged to recommend to the Board solutions and procedures to achieve
the following broad objectives:
•
•
•
Stabilise the company;
Restructure the company;
Restore value to the company.
In summary some of the major issues highlighted within these reports were:
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Date
19 July 2005
Issue Type
Operational
19 July 2005
21 July 2005
22 July 2005
26 July 2005
4 August 2005
10 August 2005
10 August 2005
10 August 2005
Legal
Human Resources
Governance
Inventory
Operational
Governance
Human Resources
Legal
27 October 2005
Financial
Description
Concerns over inadequate current purchase order
practices
Franklin Tate’s personal services agreement
New CFO and Sales and Marketing appointments
Board changes
Concerns over current valuation of inventory
Concerns over sales and operations planning processes
Confirms ASIC conducting a solvency review of ETW
Concerns over staff morale and termination issue
Highlighted issue of potential dividend to be declared on
the WInES on 31 August 2005.
Highlights a significant deficit in working capital
Further in March 2006, the Advisor was engaged by ETW to undertake a review of the
Company’s existing capital structure and make recommendations as to how the structure
could be improved.
We note that the Facility Agreement between ANZ and ETW dated 16 September 2005 (as
amended) provided that ETW may only draw on its facilities if the Advisor is satisfied,
amongst other things that ETW will not be in breach of its drawdown covenants.
In March 2007, the Advisor’s engagement to conduct and operate ETW’s Strategic Review
Unit was terminated. It was the opinion of the Board of ETW that ETW had progressed
through internal operational and management restructuring to the point that there was no
longer any need for the Advisor’s role and certainly no justification for the associated
attendant costs. The Board also had concerns regarding the need to demonstrate that
independent advice was being received in respect of restructure proposals that were and
would be received. The Advisor’s services were retained for a transition period to manage
the electronic data room being utilised to pursue the sale of part or all of the business.
Correspondence between the Board of ETW and ANZ suggests that in the opinion of the
Board, the Advisor added significant value to ETW’s business during the restructuring
period. The Board consulted with the ANZ and received support for the termination of the
Advisor’s services.
The Board subsequently appointed GEM Consulting, an independent advisory firm based
in Perth, Western Australia to provide qualitative and quantitative analysis of matters
required, principally including restructure proposals and opportunities. An independent
electronic data room was established by the Group’s legal advisors, Deacons and the 333
Performance Management dataroom was terminated.
8.
CREDITORS OPTIONS
Pursuant to Section 439A(4)(b) of the Act, I am required to provide creditors with a
statement setting out my opinion on whether it is in the creditors’ interests for the:
ƒ
Administration of the Group to end;
ƒ
Group to be wound up;
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ƒ
Group to execute a DOCA.
In forming my opinion, it is necessary to consider an estimate of the dividend creditors
might expect, and the likely costs, under each option.
8.1
Administration to End
Creditors may resolve that the administration should end if it appears the company is
solvent or, for some other reason, control of the company should revert to its directors.
Based on my preliminary investigations and analysis of the company’s financial
information, the company is insolvent. There appears no valid commercial reason why
control of the company should revert to its directors and in any event those directors have
since resigned.
If the administration were to end, there is no mechanism controlling an orderly realisation
of assets and distribution to creditors. I am unable to say what the company might
ultimately pay creditors or what costs it might incur.
Therefore, my opinion is that it is not in the creditors’ interest for the administration of the
Group to end.
8.2
Winding up of the Group
There is insufficient information available to me to determine the likely return to creditors if
the Group was to be wound up. This information is not likely to be available to me until
after the Receivers and Managers have completed the sale process and it is determined
whether the sale has resulted in adequate funds to pay the secured creditor in full.
Therefore, my opinion is that it is not in the creditors’ interest for the Group to be wound up
at this time.
8.3
Execution of Proposed DOCA
Again there is insufficient information available to me to determine the likely return to
creditors if the Group was to execute a Deed of Company Arrangement (“DOCA”). This
information is not likely to be available to me until after the Receivers and Managers have
completed the sale process and it is determined whether the sale has resulted in adequate
funds to pay the secured creditor in full. I have received offers from interested parties to
acquire the listed shell of the Group and these offers will be evaluated closer to the
appropriate time.
Therefore, my opinion is that it is not in the creditors’ interest for the Group to execute a
DOCA.
9.
ADMINISTRATORS’ OPINION
As stated above the Creditors have the following options available to them:
•
•
•
the administration of the Group ending; or
the Group being wound up; or
the Group executing a DOCA.
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Given the Group’s financial position and the ongoing Receivership I am not in a position to
recommend any of these options to creditors at this time.
It is my opinion that creditors should resolve that the meeting be adjourned for a
period of 60 days to 14 December 2007:
•
The Receivers and Managers of the Group are currently seeking expressions of
interest in the Group’s business and I am advised that this process is likely to be
completed at the end of October 2007. For this reason, the likely return to
unsecured creditors at this stage is unknown however following the sale process I
will be in a better position to estimate the potential return to creditors of the Group.
•
I advise that I have also received interest in the possible purchase of the corporate
shell of the Group which may also provide funds for the benefit of creditors of the
Group. It is too early in the process to determine whether these options should be
pursued and whether the Group should execute a Deed of Company Arrangement
to pursue them.
•
Whilst I have conducted preliminary investigations into the affairs of the Group
since my appointment, further investigations are required to ascertain the potential
recoveries which may be available to creditors if the Group is placed into
liquidation.
•
The adjournment will also provide a further opportunity for any parties to put
forward a Deed of Company Arrangement proposal which may ultimately provide a
return for creditors.
10. REMUNERATION AND DISBURSEMENTS
The Administrators’ remuneration for the period 20 August 2007 to 4 October 2007
amounts to $121,387.00 exclusive of GST and is set out in detail in annexure 2.
At the second meeting of creditors, I intend seeking approval of the following
remuneration.
ƒ
Administrators’ Remuneration
I will be seeking a resolution that the Administrators’ remuneration for the period 20 August
2007 to 3 October 2007 in the amount of $121,387.00 exclusive of GST as detailed in
Annexure 1 of this report, be approved and that in the event that funds become available in
the administration the Administrators be approved to draw those funds.
ƒ
Prospective Liquidators’ Remuneration
In the event creditors vote to wind up the remaining companies in the Group, Liquidators’
remuneration up to a limit of $200,000.00 inclusive of GST. A summary of the anticipated
tasks is set out in Annexure 1.
The Administrators, (or, where appointed, the future Deed Administrators or Liquidators)
seek approval of their remuneration on a time basis in accordance with Ferrier Hodgson’s
schedule of hourly rates set out in Annexure 1.
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11. SECOND MEETING OF CREDITORS
11.1
Time and Place of Concurrent Meetings
A second meeting of creditors will be held on Wednesday, 17 October 2007, for each
company in the Group at the Kings Hotel, 517 Hay Street, Perth at 2.00pm for creditors to
vote upon the future of the Group.
The following forms are attached to the circular to creditors, included with this report, in
respect of the meeting for each company:
•
Notice of Meeting;
•
Informal Proof of Debt or Claim; and
•
Proxy Form.
11.2
Proof of Debt Form
Please note that Regulation 5.6.23 of the Corporations Regulations provides that a creditor
is not entitled to vote at the meeting unless his claim has been admitted by the Joint and
Several Administrators or he has lodged with the Joint and Several Administrators a proof
of his debt or claim. Accordingly:
•
IF A PROOF OF DEBT HAS NOT PREVIOUSLY BEEN COMPLETED; OR
•
THE AMOUNT BEING CLAIMED HAS CHANGED
then the enclosed proof of debt form must be returned to this office no later than 4.00 p.m.
on the day prior to the meeting in order that you may vote at the meeting.
If a proof of debt has already been submitted, and the amount being claimed has not
changed, then you do not need to submit a fresh proof of debt.
11.3
Proxy Forms
A proxy form MUST be completed if:
•
YOU INTEND TO APPOINT ANOTHER PERSON TO ACT ON YOUR BEHALF
AT THE MEETING; OR
•
YOU ARE A CORPORATE CREDITOR.
If either of the above apply, then you are required to complete and return the enclosed
proxy form appointing your representative to this office no later than 4.00pm on the day
prior to the meeting. If you are a corporate entity would you please ensure that the proxy
is executed under the company’s common seal.
Note that a new proxy form is required for the second meeting, even if a proxy form was
submitted for previous meetings of creditors. However, a fresh proof of debt form is only
required if the amount claimed has changed, or if no proof has yet been lodged. Creditors’
should bring a copy of the forms to the meeting with them.
E&T - 439A report final sent to printer
Page 59
8 October 2007
Section 439A(4)(a) Report by Administrators
A proxy form will be deemed to be invalid by the Chairman if any of the following occurs:
•
•
•
•
the proxy form is not completed in full;
a proxy form is submitted for a company in the Group that is not indebted to the
creditor, or that the creditor has not submitted a proof of debt in respect of;
if a company wishes to appoint a proxy, the proxy form must be completed and
signed by an officer of the company under the company seal. The presence of a
company manager without being appointed as proxy is insufficient; or
a creditor will not be permitted to vote at the meeting unless that creditor is
presented in person or his representative has provided a correctly completed proxy
form or Power of Attorney.
THESE REQUIREMENTS WILL BE STRICTLY ADHERED TO AT THE MEETING
12.
FURTHER QUERIES
I will advise creditors in writing, if practicable, of any additional matter that comes to my
attention after the dispatch of this report that, in my view, is material to creditors’
deliberations.
In the meantime, should creditors have any queries, please do not hesitate to contact
either Sian Sullivan or Bob Bickford at this office.
DATED this 9th day of October 2007.
MARTIN JONES
Joint and Several Administrator of
Evans & Tate Limited and
Certain Subsidiaries
E&T - 439A report final sent to printer
Page 60
8 October 2007
• Annexure 1
Summary of Appointed Entities
Company
Australian Premium Wines Pty Ltd
Australian Wineries Pty Ltd
ACN
001 189 859
058 399 134
Date of
Appointment
20 August 2007
20 August 2007
A.W.T. Pty Limited
Cranswick Purchasing Pty Ltd
Evans & Tate (USA) Pty Ltd
054 567 690
082 976 921
084 350 425
20 August 2007
20 August 2007
20 August 2007
Evans & Tate Limited
Evans & Tate Premium Wines Pty Ltd
064 820 408
000 024 304
20 August 2007
20 August 2007
Evans & Tate Vineyards Pty Ltd
Ironbark Wines Pty Ltd
Irybel Pty Limited
Oakridge Vineyards Pty Ltd
Redello Wines Pty Limited
008 713 764
090 894 974
005 405 194
076 706 440
20 August 2007
20 August 2007
20 August 2007
20 August 2007
20 August 2007
Selwyn Viticultural Services Pty Ltd
Selwyn Wines Pty Ltd
Sovint Pty Limited
Wine Source (NSW) Pty Ltd
Wine Source (QLD) Pty Ltd
Wine Source (VIC) Pty Ltd
Wine Source (WA) Pty Ltd
Wine Source Holdings Pty Ltd
093 317 198
055 105 201
005 514 367
062 372 605
108 365 742
065 453 803
111 551 547
003 753 491
082 150 801
20 August 2007
20 August 2007
20 August 2007
20 August 2007
20 August 2007
20 August 2007
20 August 2007
20 August 2007
• Annexure 2
Administrators’ Remuneration
Schedule of Administrators’ Remuneration
for the Period 20 August 2007 to 3 October 2007
Employee
Hours
Partner
Manager 1
Manager 2
Supervisor
Senior 1
Senior 2
Intermediate 2
Secretary
Clerk
Junior
Total Remuneration Claimed for the Period
20 August 2007 to 3 October 2007
Add: GST
Total
37.1
64.1
6.1
66.7
150.8
85.1
4.5
59.6
0.7
204.9
679.6
Rate
$
470.00
340.00
280.00
220.00
190.00
160.00
110.00
110.00
90.00
80.00
Total
$
17,437.00
21,794.00
1,708.00
14,674.00
28,652.00
13,616.00
495.00
6,556.00
63.00
16,392.00
121,387.00
12,138.70
$133,525.70
Tasks Undertaken by the Administrators’
for the Period 20 August 2007 to 3 October 2007
General Administration
Document maintenance, file reviews and internal checklists.
Attendance to all filing.
Attendance to miscellaneous creditor and shareholder queries
General correspondence.
Statutory Duties
Prepare and lodge all statutory documents with ASIC including notice of appointment and minutes of
first meeting of creditors.
Notify the ATO and other government authorities and utilities of the appointment.
Notice to directors.
Attendance to all other compliance matters.
Taxation Matters
Advise ATO of appointment.
Review of the company records to determine outstanding liabilities to the ATO.
Correspondence and telephone conversations with the ATO regarding existing liabilities.
Discussions with company staff regarding GST matters.
Correspondence and discussions with ATO regarding GST.
Application for GST registration and new ABN.
Telephone conversations with representative of the State Revenue authority regarding outstanding
Payroll Tax/Land Tax.
Investigations
Review searches obtained from ASIC regarding the company, directors and shareholders.
Review motor vehicle and land title searches.
Advise directors of the appointment and request preparation of directors’ Statement and questionnaire.
Receipt and review of directors’ Statement and questionnaire.
Receipt, list and review of books and records held by the company.
Review of company records and other documents regarding potential voidable transactions.
Obtain and review the company’s historical financial statements.
Initial investigations into possible breaches of the Act and other legislation.
Initial investigation into possible insolvent trading and other matters.
VA-F-132-FH
Liquidators’ Remuneration
Schedule of likely tasks to be undertaken
General Administration
Document maintenance, file reviews and internal checklists.
Maintenance of administration bank account.
Attendance to filing.
Liaise with the Company’s banker.
Correspondence and telephone conversation regarding payroll authorisation and internet banking.
Correspondence and telephone conversations to facilitate electronic fund transfers.
General correspondence.
Statutory Duties
Prepare and lodge minutes of second meeting of creditors.
Insurance
Liaise with administration broker.
Taxation Matters
Liaise with the ATO.
Assets
Sale of Business as a going concern.
Plant and Equipment.
Assets subject to specific charges.
Stock.
Other Assets.
Leasing.
Debtors
Attendance to all debt collection matters.
Trade On Duties
Trade on management.
Processing receipts & payments.
Secured Creditor
Report to the secured creditor.
VA-F-132-FH
Employees
Employee enquiries.
GEERS.
Calculation of entitlements.
Employee dividend.
Workers compensation claims.
Other employee issues.
Creditors
Creditor enquiries.
Retention of title claims.
Secured creditor reporting.
Creditor reports.
Receive and adjudicate upon proofs of debt.
Meeting of creditors.
Committee of Inspection
Convene meeting of the committee of inspection.
Investigations
Conduct investigation.
Call for and conduct examinations.
Litigation / Recoveries.
ASIC reporting.
VA-F-132-FH
The Firm’s Schedule of Hourly Rates
SCHEDULE OF HOURLY RATES & GENERAL GUIDE TO STAFF EXPERIENCE
•
Classification
•
Partner/Appointee
•
Rate
($)
•
Experience
•
470.00
•
The Partner/Appointee is a registered
Liquidator and member of the ICAA
and IPAA bringing specialist skills to
the administration or insolvency task.
For specific experience and other
details of the appointee/s, please visit
our
website
at
www.ferrierhodgson.com
Director
•
400.00
•
Generally, minimum of 12 years
experience at least 2 years of which
is to be at Manager level. University
degree; member of the ICAA and
IPAA with deep knowledge and
lengthy experience in relevant
insolvency legislation and issues.
•
Senior Manager
•
340.00
•
Generally, more than 7 years
experience with at least 2 years as a
Manager.
University
degree;
member of the ICAA and IPAA; very
strong
knowledge
of
relevant
insolvency legislation and issues.
•
Manager
•
280.00
•
Generally, 5-7 years chartered
accounting
or
insolvency
management experience. University
degree; member of the ICAA and
IPAA; sound knowledge of relevant
insolvency legislation and issues.
•
Supervisor
•
220.00
•
Generally, 4-6 years chartered
accounting
or
insolvency
management experience. University
degree; member of the ICAA;
completing
IPAA
Insolvency
Education
Program.
Good
knowledge of relevant insolvency
legislation and issues.
•
Senior 1
•
190.00
•
Generally, 2-4 years chartered
accounting
or
insolvency
management experience. University
degree; completing the ICAA’s CA,
program. Good knowledge of basic
insolvency legislation and issues.
VA-F-132-FH
•
•
Classification
•
Senior 2
•
Rate
($)
•
Experience
•
160.00
•
Generally, 2-3 years chartered
accounting
or
insolvency
management experience. University
degree,
ICAA’s
CA
program
commenced.
Intermediate 1
•
130.00
•
0 to 2 years experience.
Has
completed or substantially completed
a degree in finance/accounting.
Under supervision, takes direction
from senior staff in completing
administrative tasks.
•
Intermediate 2
•
110.00
•
0 – 1 year’s experience. Undertaking
a degree part-time in finance /
accounting. Under supervision, takes
direction from senior staff in
completing administrative tasks.
•
Senior Secretary
•
110.00
•
Appropriate skills including machine
usage.
•
Junior
•
80.00
•
Completed schooling and plans to
undertake further studies. Required
to assist in administration and day to
day field work under the supervision
of more senior staff.
VA-F-132-FH
•
Notes:
1. The hourly rates are exclusive of GST.
2. The guide to staff experience is intended only as a general guide to the qualifications and
experience of our staff engaged in the administration. Staff may be engaged under a
classification that we consider appropriate for their experience.
3. Time is recorded and charged in six-minute increments.
4. Rates are subject to change from time to time. Disbursements are recovered on the
following basis.
•
Disbursements
•
Postage
•
At cost
•
Telephone
•
At cost
•
Photocopying
•
Facsimile
•
At cost
•
Company Search
•
At cost
•
Advertising
•
At cost
•
Storage – Per Box
•
At cost
•
Storage – Per File
•
At cost
•
Couriers
•
At cost
•
•
•
Charges
(Excluding GST)
35 cents a copy
The Partners of Ferrier Hodgson Perth are members of the Insolvency Practitioners
Association of Australia and follow the IPAA Statement of Best Practice – Remuneration.
A copy of the Statement of Best Practice – Remuneration may be found on the IPAA website
at www.ipaa.com.au
VA-F-132-FH