Wine assets left by celebrated Okanagan wine pioneer Harry McWatters have been sold out of creditor protection for $5.8 million to Ron and Shelley Mayert, who intend to keep management and staff in place, expand the winery and buy vineyard land.
When McWatters died last July, he left his heirs with his business, Encore Vineyards Ltd. – a holding company that owned brands such as Evolve Cellars, Time Winery and McWatters Collection as well as land and a winery in downtown Penticton, and a large inventory of wine.
Unfortunately, the money-losing venture had about $17.95 million in liabilities, $3.37 million in assets and crushing interest payments.
“My dad kept a lot of things close to his chest,” said McWatters’ daughter, Christa-Lee McWatters, who told Business in Vancouver that she had no idea that the company for which she was general manager was so deep in the red.
“There was definitely some surprises just dealing with so many different things after my dad’s passing.”
She determined that the best approach would be to try to sell the business. She sought buyers and found seven parties that were willing to sign non-disclosure agreements to see confidential financial information.
That collection of potential buyers included what receiver BDO called “very large existing wine operators from Canada and globally.”
Only one of the seven interested parties made a formal bid, however: Abbotsford’s Ron Mayert and wife Shelley Mayert.
Ron Mayert earned his wealth by founding and growing the pet food company Petcurean, which sells products around the world. He also co-owned and recently sold his shares in Chilliwack’s Old Yale Brewing, and was an owner of the Napa Vineyard Inn, in Yountville, California.
Mayert told BIV that he was unfazed about being the only one of the interested parties to make a bid.
“I wasn’t concerned so much about that,” he said. “I was confident about what we can do from a business standpoint. It’s about being involved with something that we wanted to be involved with, and we want to learn about the Okanagan’s wine industry – my wife and myself – we are really excited about being part of the B.C. wine industry and the Canadian wine industry.”
BDO told unsecured creditors that if they turned down the Mayerts’ bid, the venture would fall into bankruptcy and all money generated from liquidating the business’ parts would go to secured creditors, including, primarily, the Bank of Montreal.
BDO added that were unsecured creditors to accept the bid, they could look forward to about 37 cents on every dollar owed – before fees. An amended proposal to them included a formula that implied that they would receive at least something from their claim were the sale to close.
“It was a disaster that the new buyer has salvaged,” historian, and the author of many editions of the Okanagan Wine Tour Guide, John Schreiner told BIV. "This guy is taking on a risk. The fact that there were six other people who walked away from it tells you that he’s taking on a risk."
Schreiner scanned the names of creditors and said he was shocked to see people such as Bob Wareham – Harry McWatters’ former partner at Sumac Ridge – being listed as owed nearly $7.2 million.
“I had no idea that Harry was that deep in into the glue," Schreiner said. "It was astonishing.”
For the Mayerts, however, this is a fresh start.
Ron Mayert told BIV that he grew up on a Summerland orchard farm, and that while he and his wife will continue to live in Abbotsford, they will visit the Okanagan regularly.
Much of what attracted him to buy Encore Vineyards, effective July 1, was the stable of brands.
“We’ll steward the brands and the company, and our vision for the business is to continue on with what Harry and the McWatterses started to build,” he said. “We want to finish that.”
He said that to have Christa-Lee McWatters as general manager, and sister Derrian McWatters as production manager was another part of what made the transaction attractive.
“Christa-Lee and myself really hit it off really well,” he said. “We talked about the honesty and integrity that is important to us. She was very honest with us going through this process.”
The company made very little wine last year and it owns no vineyards, instead it bought grapes from contract-growers.
Maynert said he wants to buy vineyard land so his winery will have more control over its ingredients, and a purchase “could happen next month if we get the right spot.”
He also wants to add to his team of nearly 20 people by adding a head of hospitality as well as someone to do marketing.
Encore Vineyards’ winery site is in downtown Penticton in a renovated former cinema complex. It has a restaurant that is operating at half-capacity as well as a large patio that can also host functions.
Mayert said he aims to attract a lot of British Columbians who are travelling around the province on staycations this summer.
“We’d like to make it the No. 1 stop when you’re coming into the Okanagan,” he said. “We have some really cool ideas coming.”