Marie Brizard Wine & Spirit is being bailed out by its largest shareholder in a bid to resolve some of its financial woes, after reporting operating losses of -€72.7 million in 2017 and downgrading expectations for 2018.
The French drinks company, which announced in September it would sell some of its non-core brands, has signed a bridging loan deal with its largest share-holder, Compagnie Financière Européenne de Prises de Participation (COFEPP) to shore up its finances, relieve debt and strengthen its cash flow.
It has outlined two possible scenarios, depending on whether the deal is approved by shareholders and gets the go-ahead by the French financial authorities and French and Polish anti-trust authorities.
The preferred agreement will see a €25 million loan from COFEPP repayable in April 2020, at an annual interest rate of 4.56%, plus the issue of around 9.4 million shares, worth €37.712 million, equivalent to a premium of 5.60%, which will see COFEPP increases its current stake of 29%. If approved, it will also hold a majority of seats on the Board of Directors.
MBWS said this option would enable a cash contribution of €45 million by COFEPP after the exercising of certain long and short-term stock warrants. The company’s shareholders’ equity would also be strengthened by the exercising of the stock warrants granted to all the other shareholders.
MBWS’s Chief Executive Officer Andrew Highcock said the company was very happy to have reached an agreement with COFEPP, after it struggled to reach an agreement with the bank.
“Faced with a deteriorating financial situation, decreasing net cash and difficulties in quickly reaching an agreement with our banking partners, it became necessary to find a solution that would enable us to continue to drive our business,” he said.
“We have therefore sought an optimal solution, in the best interest of all of our partners. During our discussions, we considered COFEPP to be the ideal industrial partner to support MBWS in its future development and to enable us to demonstrate the potential of our Group.”
The company also reported its full year sales for 2017 today, which saw operating losses of -€72.7 million and the first half of 2018, where gross profit fell nearly 26% to €48.6m, compared to the first half of the previous year. This came on the back of net sales slumping -7.6%, with the EBITDA of the first half recorded at -€21.1 million, a significant fall compared to the same period in 2017. It amended its full year EBITDA for 2018 to between -€25m and -€28m, due to a likely “significant” sales decrease among large retailers and flat activity in the USA.
Net sales for the 12 months to 31 December 2017 fell -1.8% to €423.3m, it said, accelerated by the end of third party brand contracts.
It also recorded an impairment – the diminishing in quality, strength amount, or value of an asset – of around €57.7m, more than half on the brands.
Net sales from Western Europe, Middle East & Africa (WEMEA) fell 3% on 2016 to €133.3m in 2017, with EBITA from the area falling -20.5% versus the previous year. Sales in Central and Eastern Europe (CEE) were also down -19.8% to €76.0m, primarily due to a sharp decline in sales in Poland (down 34%) on the back of competitive pressure and changes of its route-to-market. This plunged EBITDA in the area from €9.6m in 2016 to -€7.6m in 2017. Sales in America fell -8.3% to €25.6 million, but were more promising in Asia Pacific, growing +16.9% on last year’s figure, to €4.4m in 2017.
The Group’s Other Businesses generated 2017 net sales of €184.0m, a year-on-year increase of +11.0%.
In the first half of 2018, gross profit in H1 2018 was €48.6m, a -25.9% decrease compared to the first half of the previous year
In 30 June 2018, the Group’s net debt stood at -€51.7m.
The company’s portfolio includes William Peel scotch whisky, Sobieski vodka, Krupnik vodka, Fruits and Wine flavoured wine, Marie Brizard liqueurs and Cognac Gautier.