Time Winery has been given a new lease on life, after its iconic downtown Penticton location and some other assets left behind by the late Harry McWatters were purchased out of creditor protection.
The court-approved deal closed July 1 and saw Abbotsford couple Ron and Shelley Mayert pay $5.8 million for Evolve Vineyards, which owned Time Winery and two separate wine brands: Evolve Cellars and McWatters Collection.
Court documents associated with the restructuring show Evolve Vineyards had liabilities of $18 million against assets of $3.4 million as of March 31. Terms of the sale will see creditors get just 37 cents on the dollar, while shareholders will get nothing.
The shareholders list includes Harry’s daughter, Christa-Lee McWatters, who told The Herald on Monday her dad, who died in July 2019, kept some things “relatively close to his chest.”
Christa-Lee, who served as president of Evolve Vineyards, will stay on as Time Winery’s general manager, while her sister, Darrien, will remain as operations manager.
Chef A.K. Campbell and winemaker Lynzee Schatz were also retained, and there has been no interruption to operations at Time Winery, which employs about 20 people at its wine bar and production facility at 361 Martin St. The space, which was formerly Penmar Theatre, fully reopened in July 2018 after about two years of planning and construction.
The new owners have already mused about “substantial investments,” including possibly buying vineyards – rather than relying on contracted growers – to feed the winery, said Christa-Lee.
But it wasn’t the price of grapes that led to Evolve Vineyards’ financial difficulties, according to court documents published online by BDO, the firm that handled the restructuring.
“Since 2015, the company had suffered ongoing losses due to significant delays and cost overruns in the construction of the (Time Winery) premises, large carrying costs on debt, the need to pay for rented production facilities during construction and higher than expected marketing costs in order to grow market share as well as factors outside of the company’s control such as the Alberta wine boycott and forest fires impacting tourism,” states a May 2020 notice to creditors.
Following Harry’s death in July 2019, Christa-Lee became company president and began cutting costs – like a $125,000-a-year sponsorship fee to be the Calgary Flames’ official wine supplier – but it wasn’t enough to turn things around, according to the documents. So, with institutional investors leery about lending more money, Evolve Vineyards was quietly put up for sale in December 2019.
Just one offer actually materialized, but the receiver recommended in favour of it because it allowed creditors to get more than they would than if Evolve Vineyards had simply been allowed to go bankrupt.
Encore Vineyards was 74% owned by Harry’s estate and had 177 separate shareholders; all but 11 of them had invested under $100,000, according to court documents. Their total equity of $5.1 million is now worth nothing, because sale proceeds flowed first to creditors.
The company’s main asset was Time Winery, which had a book value of $8 million, but was appraised at $6 million and listed at just $3 million for the purpose of the restructuring. Wine inventory was booked at $2.6 million, but listed at just $260,000 for the purpose of restructuring.
Through his 50-year career, McWatters, who was in his early 70s when he died at home in his sleep, was instrumental in helping found the B.C. Wine Institute, the B.C. Wine Information Society, VQA Canada and B.C. Hospitality Foundation. For his efforts, McWatters was affectionately dubbed “the Godfather of B.C. wine.”