Cheviot Bridge has backed out of the race for troubled Australian wine company Evans & Tate.

The company said today (20 July) that it will no longer be involved in a deal with the winemaker, which offered Evans & Tate an alternative to an offer from Ferngrove Vineyards, as well as restructuring plans proposed by financial services group Pendulum Capital and ANZ Banking Group.

Under the Ferngrove proposal, Evans & Tate would merge with Ferngrove in return for the issue of 413.33m shares to Ferngrove. The proposed merger would also see ANZ, to whom Evans & Tate owes around A$100m (US$84.86m), convert $45m of that debt into 409.09m shares at 11 cents each.

Following a two-year escrow period, ANZ would exit as a shareholder in the merged entity.

After the merger, there would be an underwritten, one-for-three rights issue to all shareholders at five cents per share which would raise around $17.68m, or possibly as much as $20m.

Around $10m would be used to pay off debt, with the rest becoming working capital. Ferngrove believes that under its plan ETW's core debt with ANZ would be reduced to around $42m after the rights issue.

Both proposals would see ANZ recapitalise Evans & Tate by converting into equity US$45m of the $100m owed by the winery.