REG - Naked Wines PLC - Update regarding closure of Silicon Valley Bank

Naked WinesAnnouncement

13/03/2023 07:00

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RNS Number : 7202S  Naked Wines PLC  13 March 2023

13 March 2023

 

Naked Wines plc

 

("Naked Wines" or "Group")

 

Update regarding closure of Silicon Valley Bank of Santa Clara ("SVB")

 

Highlights

 

●    SVB, one of the Group's banking partners, was closed by regulators
on Friday March 10th

●    Group day to day operations unaffected, FY23 trading consistent with
guidance provided in January

●    No loss expected to the Group resulting from SVB failure

●    Robust Group liquidity with £32m gross cash on hand of which £17m
immediately available

●    Financial plans assumed no further drawdown from SVB credit
facility, 50% of which is provided by Bridge Bank who remain supportive

●    Additional insight on SVB resolution process required to fully
determine next steps, search for new financing partner underway

Details

 

On Friday 10th March it was announced that regulators had closed down SVB,
with the US Federal Deposit Insurance Corporation ("FDIC") appointed as
receiver. The Group holds cash with SVB in a variety of accounts in the USA
and UK. SVB is also the administrative agent and issuing lender for the
Group's $60m asset-backed credit facility. The Group is offering the following
assessment of the impact of the closure based on our current and best
interpretation of our mutually agreed contract terms.

 

As of Friday March 10th the Group had gross cash on hand of £32m. While the
situation remains fluid, our contractual assessment to date shows us having
less than £0.6m of cash which we considered, prior to the US Treasury
Announcement referenced below, to be at risk and potentially uninsured due to
the closure of SVB. £14m is held in a cash sweep account under which SVB acts
as custodian for 3rd party money market funds. The contract terms of this
account state that these funds are held by SVB as agent and that in the event
of a failure of the bank the Group's ownership interest should be recognised.
As a result the Group should be entitled to a return in full of those funds
after completing any procedures required by the FDIC. We note the joint
statement issued by the Treasury, Federal Reserve and FDIC aims for
"Depositors will have access to all of their money starting Monday, March 13",
however, at present we do not know with certainty the timeframe in which we
gain full access to these funds.

 

The remaining £17m of cash on hand is held across multiple other banks. We
retain fully functioning accounts with other banks in each of our markets
enabling us to continue to operate as usual in all our territories and the
available cash balances are forecast to be adequate to manage the business
while we resolve the SVB position. Our plans prior to this event assumed no
further drawdown on our credit facility. We continue to trade consistent with
the guidance issued with our trading statement in January.

 

The Group's $60m asset backed credit facility, which is syndicated 50-50
between SVB and Bridge Bank, remains an important part of our financing
arrangements. As explained in the Group's latest going concern analysis this
provides liquidity protection in the event of weaker trading than expectations
as well as day to day liquidity. We have engaged in direct discussions with
Bridge Bank who remain supportive of the Group and have indicated their desire
to continue providing their services. While awaiting information from SVB and
their successor business as to their intentions the Group has commenced a
process to identify potential new financing partners.

 

Nick Devlin, Group Chief Executive, commented:

 

"We are announcing today that day to day operations are unaffected and we
don't expect to incur any loss as a result. Whilst this situation remains
fluid, we maintain a robust balance sheet with approximately £185m of stock
and £17m of immediately accessible cash. We remain focussed on delivering for
our customers and winemakers and continuing to execute against the pivot to
profit strategy announced in October."

 

For further information, please contact:

 Naked Wines plc                               IR@nakedwines.com

 Nick Devlin, Chief Executive Officer

 James Crawford, Chief Financial Officer

 Clara Melia / Chris MacDonald

 Investec (NOMAD & Joint Broker)               Tel: 0207 597 5970

 David Flin / Carlton Nelson / Ben Farrow

 Jefferies (Joint Broker)                      Tel: 0207 029 8000

 Ed Matthews / David Genis / Gill O'Driscoll

 Instinctif (Financial PR)                     Tel: 07917 178 920 / 07931 598 593

 Guy Scarborough / Damian Reece

 

About Naked Wines plc

 

Naked Wines connects everyday wine drinkers with the world's best independent
winemakers.

 

Why? Because we think it's a better deal for everyone. Talented winemakers get
the support, funding and freedom they need to make the best wine they've ever
made. The wine drinkers who support them get much better wine at much better
prices than traditional retail.

 

It's a unique business model. Naked Wines customers commit to a fixed
prepayment each month which goes towards their next purchase. Naked in turn
funds the production costs for winemakers, generating savings that are passed
back to its customers. It creates a virtuous circle that benefits both wine
drinker and winemaker.

 

Our mission is to change the way the whole wine industry works for the better.
In the last financial year, we served more than 934,000 Angel members in the
US, UK and Australia, making us a leading player in the fast-growing
direct-to-consumer wine market.

 

Our customers (who we call Angel members) have direct access to 268 of the
world's best independent winemakers making over 2,200 quality wines
in 22 different countries. We collaborate with some of the world's best
independent winemakers like Matt Parish (Beringer, Stags' Leap) and 8-time
Winemaker of the Year Daryl Groom (Penfolds Grange).

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