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Oregon's Olsen Agricultural Files Chapter 11: Signs Financing Pact with Bacchus Capital

Date: 06/02/11

by Cyril Penn

Olsen Agricultural Enterprises, which has emerged as one of the largest vineyard owners in Oregon’s Willamette Valley, filed a bankruptcy petition yesterday to restructure its debts. At the same time, the company signed a term sheet with Bacchus Capital for $3 million of debtor in possession financing to fund operations during the bankruptcy, subject to court approval.

It is unusual for a wine-related venture to obtain new financing as it files for bankruptcy. Ultimately Bacchus Capital is looking toward a post bankruptcy partnership with Olsen Agriculture on its wine and vineyard ventures. Bacchus has previously provided funding for Cameron Hughes Wines and for Qupé.

Olsen Agricultural Enterprises is a fifth generation farming family in the Willamette Valley that first planted grapes in about 2004 and now has roughly 500 acres of Pinot Noir and Pinot Gris, planted, with a little Chardonnay and Riesling. The company sells wine under the Viridian brand.

Olsen Agricultural farms a number of different crops, including grass seed. Jamie Olsen said the bankruptcy petition was driven by a downturn in the grass seed business caused by the recession at a time when the operation had recently expanded with its vineyard operations. The lower demand in the worldwide grass seed markets resulting from the recession hit homebuilders and golf courses -- major buyers of grass seed. Olsen Agricultural Enterprises also grows grains, squash, peppermint, hazelnuts, and blueberries. The company farms approximately 8,000 acres.

Jamie Olsen said his family's company delayed plans to expand its wine brand following the downturn and has been more aggressive about selling grapes and bulk wine. The company currently makes about 20,000 cases under its own brand and provides wine for private label programs.

Rabo AgriFinance issued default notices and began exercising remedies against the company, leading to the bankruptcy filing. It lists liabilities of approximately $37 million and assets of $50 million.

There’s no relation between Olsen Agricultural in Oregon and Olsen Estates, the family that farms grapes in Washington’s Yakima Valley that recently closed its winemaking operation.

“We’re extremely excited -- after we get through this debt funding crisis -- to be working with the Bacchus group to expand our brand,” Jamie Olsen said.

"This is another example of our flexible financing capability," said Peter Kaufman, Bacchus Capital Managing Partner. "The opportunity to be of assistance to Olsen in its efforts to restructure debt and operations through Chapter 11 was something we could not pass up."

“The loan we’re making today is to Olsen Agriculture to allow them to smoothly go through this process,” Bacchus Capital Managing Partner Sam Bronfman said. “The ultimate goal is to team with them in their wine business.”

Olsen Agriculture also engaged turnaround consultants Hamstreet & Associates to assist in its reorganization and believes it will be able to execute on a reorganization that provides for repayment of all its obligations in full.

“This is not a traditional thing to do in the wine space but we’re a private equity firm in the wine space that can provide whatever capital structure for whatever needs we and the indebted company agree on,” Kaufman said. “We have a lot of faith in this situation and this opportunity.”

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