Calaveras
Version 2.1
Calaveras Vineyards
In March 1994, Anne Clemens, a senior vice president at Goldengate Capital, received a loan proposal from Tom Howell, a managing director with NationsBank=s investment-banking group.
The brochure described the prospective management acquisition of Calaveras Vineyards and solicited Goldengate=s participation in the $4.5-million senior financing facility. The facility would consist of a $2-million term loan and a revolving credit of up to $2.5 million. Clemens would need to decide quickly whether the proposed terms were attractive, where to position Goldengate in this credit, and whether to offer a counterproposal on terms.
Goldengate Capital was a large West Coast financial institution with main activities in commercial lending, asset-based financing, leasing, mezzanine lending, and equity investing.
Clemens had worked with Howell on a previous deal, and had participated in two other business deals structured by him. These had proved to be very profitable deals for Goldengate, so Clemens planned to give this new proposal careful study. NationsBank N.A. was the third-largest financial institution in the United States.
Calaveras Vineyards
Calaveras Vineyards was situated on 220 acres in Alameda Valley, California. The vineyards occupied 175 acres. The remaining acres consisted of various equipment sheds (to house the farming equipment), the winery building (containing storage tanks, aging barrels, and a small bottling operation), and a small farmhouse with guestrooms, offices, and the requisite tasting and sales room. Exhibit 1 summarizes the major assets of the vineyard.1
1
Clemens had heard that choice vineyard land might sell for between $5,000 and $10,000 an acre, but that acreage was usually sold in units sufficient in size to constitute a winery business. She suspected that, in a forced liquidation, receivables could be sold for 85 percent of face value, and inventory (virtually all of which was finished goods) could be
sold
Calaveras Vineyards
In March 1994, Anne Clemens, a senior vice president at Goldengate Capital, received a loan proposal from Tom Howell, a managing director with NationsBank=s investment-banking group.
The brochure described the prospective management acquisition of Calaveras Vineyards and solicited Goldengate=s participation in the $4.5-million senior financing facility. The facility would consist of a $2-million term loan and a revolving credit of up to $2.5 million. Clemens would need to decide quickly whether the proposed terms were attractive, where to position Goldengate in this credit, and whether to offer a counterproposal on terms.
Goldengate Capital was a large West Coast financial institution with main activities in commercial lending, asset-based financing, leasing, mezzanine lending, and equity investing.
Clemens had worked with Howell on a previous deal, and had participated in two other business deals structured by him. These had proved to be very profitable deals for Goldengate, so Clemens planned to give this new proposal careful study. NationsBank N.A. was the third-largest financial institution in the United States.
Calaveras Vineyards
Calaveras Vineyards was situated on 220 acres in Alameda Valley, California. The vineyards occupied 175 acres. The remaining acres consisted of various equipment sheds (to house the farming equipment), the winery building (containing storage tanks, aging barrels, and a small bottling operation), and a small farmhouse with guestrooms, offices, and the requisite tasting and sales room. Exhibit 1 summarizes the major assets of the vineyard.1
1
Clemens had heard that choice vineyard land might sell for between $5,000 and $10,000 an acre, but that acreage was usually sold in units sufficient in size to constitute a winery business. She suspected that, in a forced liquidation, receivables could be sold for 85 percent of face value, and inventory (virtually all of which was finished goods) could be
sold