International consortium takes control of Carlyle’s Accolade Wines

The Australian wine company expects the recapitalization to bolster its growth in a market that has proven challenging in recent years.

An international consortium of five institutional investors will acquire equity ownership of Australia’s Accolade Wines from the Carlyle Group as part of a recapitalization plan to fortify the company’s finances.

Australian Wine Holdco Limited (AWL) comprises funds managed by London-based Intermediate Capital Group and Sona Asset Management, Copenhagen-based Capital Four, Boston-based Bain Capital Special Situations and Sydney-based Samuel Terry Asset Management.

Accolade Wines is one of the world’s largest wine companies with more than 50 brands including Hardys and Banrock Station.

The consortium will take control of the company from its current shareholders.

A Carlyle spokesperson said that despite Accolade’s efforts, macroeconomic conditions affecting the wine industry had impacted the company’s profitability and made its debt levels unsustainable.

“Together with Accolade, we had explored several options over the past year to help refinance the business to enable it to recover from current industry headwinds.

“The goal of all parties has been for Accolade to emerge stronger with a restructured balance sheet that will allow it to deliver continued success in its key markets, and we believe it is in the best interest of the business and its key stakeholders that we finalize terms of a restructure and transition ownership of the company to its lenders.”

The recapitalization plan aims to decrease Accolade’s senior interest-bearing debt and reduce its annual interest expenses.

AWL said Accolade had experienced “acute operating and financial conditions” due to inflation, excess grape supply and high levels of debt, among other factors.

“We hope this restructure, if implemented, will help build a more secure long-term future of the business,” an AWL spokesperson said.

A source close to the transaction told Agri Investor that in recent years, global winemakers including Accolade have faced challenges including increased global supply chain and freight costs, inflationary impacts on inputs like energy costs and packaging, Chinese tariffs on Australian wine, and a decline in demand as consumers tighten their belts.

“In response to these headwinds, Accolade and Carlyle had worked to streamline Accolade’s operating business model and product portfolio by focusing on investment in key brands and markets where it continues to win share with retailers and consumers, particularly in the UK and Australia where market share gains are at their highest,” the source said.

Carlyle worked with Accolade on the divestment of “non-core” assets such as vineyards and production facilities, enabling the company to invest in its core brands.

As part of a strategic review to decrease its debt pile, last year Accolade sold its award-winning House of Arras brand along with 24ha of Tasmanian vineyards to family-owned company Handpicked Wines.

Accolade expects fresh funding from AWL’s investors to drive growth and give the company more flexibility in its operations.

Accolade CEO Robert Foye said the restructure will help to address challenges in the wine industry.

“Like all Australian winemakers, we have been hit by a number of macro-economic and industry headwinds in recent years.

“Despite our strong stable of brands and leadership positions in key markets, as well as operational measures taken to strengthen the business, our ability to respond to these challenges and grow has been hampered by an unsustainable balance sheet.”

Foye said the consortium will help Accolade to capitalize on new opportunities in the market.

“With this recapitalization and the support of our new shareholders, we will be ideally positioned to take advantage of the significant opportunities to meet customer demand and grow sales around the world.”

AWL expects to complete the transaction by mid-2024, subject to regulatory approvals.