Winemaking group Sacred Hill has debts and liabilities of $98.5 million, nearly a third of which is owed to unsecured creditors, says the first report of receivers trying to sell the Hawke’s Bay vintner.
Westpac NZ, which appointed receivers Rees Logan and Andrew McKay of BDO Auckland, in May, is owed $52.3m.
Other creditors on the group’s personal property securities register are thought to be owed $6.4m, though this is still subject to verification, and preferential creditors, including employees, IRD and NZ Customs, are owed $4.1m, said the report.
Unsecured creditors are owed $35.5m – they include related parties which claim $25.1m.
Receivers were called in to Sacred Hill Vineyards by Westpac bank on May 6. They have subsequently also been appointed receivers of Sacred Hill Marlborough Vineyards, Sacred Hill Family Vineyards and Sacred Hill Global Ltd.
Sacred Hill Vineyards was formed in June 1999 and operates a vineyard, winery, and processing and distribution business.
The company attributed its failure, and that of the group, to several issues, said the receivers.
In 2019 it was discovered the company’s inventory level was materially overstated in its audited accounts.
The group had significant debt facilities with the bank, supported by general security agreements and cross-guarantees. The debt facilities had been advanced against the security of the overstated inventory, said the receivers.
On being advised of the overstated stock, the group decided to restructure and separate its Marlborough and Hawke’s Bay operations, with a view to selling the Hawke’s Bay operation to reduce debt.
It tried to do this in 2020, but a conditional sale agreement fell through.
Other factors including a poor 2021 vintage, high NZ-US exchange rate and poor financial performance meant the group was reliant on the ongoing support of the bank to continue trading.
Following ongoing defaults, the bank decided in May to appoint receivers.
They noted related company Quench Collective, Sacred Hill group’s New Zealand distributor, was put into liquidation on April 12 by its shareholder. It had debt of $3.1m.
The receivers said the sale of the business as a going concerned offered the best chance of maximising recoveries for creditors, and they had secured the support of key staff, landlords, customers and suppliers to keep trading.
A restructure had been carried out to cut operating costs.
The sale process was ongoing.
The receivers said given a confidential sale process was under way, no assets values were provided in the first report.
Sacred Hill Vineyards is 65 per cent owned by Sacred Hill Winery and 30 per cent by Hong Kong’s Jebsen Beverage Company.Sacred Hill Winery is 90 per cent owned by David Mason of Napier.
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