Vincor International acquires Western Wines

Monday, 2 August, 2004
Vincor International Inc.
Vincor International Inc., one of North America's largest producers of wine and related products, today announced that it has acquired the shares of privately held Western Wines, owner of the Kumala brand and the largest independent wine importer and distributor in the United Kingdom.  
'This acquisition squarely meets all of our strategic objectives and greatly increases the scope and scale of the Company, moving us significantly closer to our goal of being one of the world's top-ten wine companies,' said Donald Triggs, Vincor's President and CEO. 'With this acquisition, Vincor gains an impressive portfolio of premium brands that includes Kumala, which is the largest South African export brand and the UK's top selling brand from this rapidly growing New World wine region.  We now look forward to introducing these brands into our growing international distribution network and drawing on Western Wines' experience and strong relationships in the UK to drive sales of our focus brands from North American, Australian and New Zealand into this important market,' added Triggs.
Vincor paid £84 million (C$204 million - £1 = C$2.43) for the business and assumed £49 million (C$119 million) in debt for an aggregate enterprise value of £133 million (C$323 million).  The purchase price was satisfied in part with the proceeds of the equity issue the Company completed in February, 2004 and additional funding was provided under the terms of a refinancing of the Company's banking and credit facilities which included a reduction of two hundred basis points in the cost of the Company's long term debt.  This refinancing was conducted between the Company, the Bank of Nova Scotia, The Bank of Montreal and The National Bank of Canada.  This refinancing also included the private placement purchase of U.S. dollar denominated notes by the John Hancock Mutual Life Insurance Company.  As a requirement of this refinancing, the Company will be unwinding the current swap arrangements it has in place as a hedge against future interest rate increases, resulting in a one-time charge of approximately C$8.5 million before taxes which, the Company will expense in the current fiscal quarter.
Vincor expects this acquisition to be accretive to earnings beginning in fiscal 2006 even after taking into account:
● the dilution caused by the recent equity issue,
●  the one-time charges to unwind the current swap arrangements; and
●  the requirement that £4.8 million (C$11.7 million) portion of the purchase price be accounted for as a compensation expense over the next three fiscal years.
This acquisition would have been accretive in the current fiscal year absent the one-time charge related to the unwinding of the above noted swap arrangements.
The acquisition of Western Wines provides Vincor with considerable distribution reach in the UK and Northern Europe as well as an extensive portfolio of approximately 400 brands divided between owned brands, agency brands and private label products.  Founded in 1980, Western Wines has grown to become the largest independent wine importer and distributor in the UK, which, in volume terms is the second largest market for New World wine. Western Wines has approximately an 8% share of the UK off-premise (retail) market. In 2004, the Company expects sales of £97.5m (C$ 236.9 million), an increase of approximately 25%over 2003, and EBITDA of £12.5 m (C$30.4 million). Total volume is expected to rise this year by 15% to 6.4 million cases.
Most of Western Wines' sales are from branded, New World wines, with the majority of its products coming from South Africa, an emerging New World wine region. South Africa currently ranks ninth in global wine production and is growing strongly internationally, with total exports rising 10% in 2003. Western Wines sells more than 1 out of every 3 bottles of South African wine sold in the UK and the Company's South African portfolio is highlighted by Kumala, which is the UK's leading South African brand and among the UK's top five wine brands by both value and volume. Western Wines also distributes the UK's number one selling branded Chilean wine and is the third largest importer and marketer of Italian wine.
'Western Wines has an outstanding track record for brand development, customer service and innovative marketing, all of which flows from our deep knowledge of the UK market and our focus on customer and supplier relationships,' noted Roger Gabb, Western Wines' Chairman and founder.  'As part of Vincor, we now look forward to growing and enhancing the important relationships we have with our many partners, suppliers and customers and accelerating the growth of Kumala by introducing it into Vincor's international distribution network.'
About Vincor
Vincor International Inc. is North America's 4th  largest producer and marketer of wines and related products by volume, with leading brands in all segments of the market.  Vincor has wineries in British Columbia, Ontario, Quebec, New Brunswick, California, Washington State, Western Australia and New Zealand and markets wines produced from grapes grown in the Niagara Peninsula of Ontario, the Okanagan Valley of British Columbia, the Dunnigan Hills of California, the Columbia Valley of Washington State, Western Australia, New Zealand, South Africa and vineyards around the world.  Vincor's premium brands include Inniskillin, Jackson-Triggs, R.H. Phillips, Toasted Head, EXP, Hogue, Goundrey, Amberley, Sumac Ridge, Hawthorne Mountain, Kim Crawford, Kumala, Ancient Coast and Sawmill Creek, which complement its popular priced wines such as Entre-Lacs, L'Ambiance, Sola Nero and Notre Vin Maison.
Vincor trades on the Toronto Stock Exchange under the symbol 'VN' and has approximately 33 million common shares outstanding.