Running a vineyard and making wine are time- and capital-intensive processes. Margaret and Dan had started Duckhorn with the help of several investors. By 2007, Duckhorn was owned by 80 families, most of who had been involved with the winery since its early days. After three decades of operations, some of the families invested in Duckhorn were looking to sell their investments.
Private equity firm GI Partners saw an opportunity to help the company effect the changes it needed to make to its ownership and be a part of the fine Duckhorn tradition through buying a controlling stake in the winery. To accomplish this, GI Partners needed a significant amount of financing, and GE Capital helped provide that capital. Today, GE Capital acts as the lead bank and administrative agent on a $124 million asset based revolver and term loan for Duckhorn.
GE Capital really understands our business, and has worked with us closely to achieve our financial objectives.
GE Capital's strategy
GE Capital specializes in providing debt financing to mid-sized companies, including private equity-backed firms. In 2008, despite a challenging credit market, GE Capital along with other lenders facilitated a multi-lender, two-tiered senior loan facility to ensure Duckhorn had the capital it needed to achieve its new ownership structure while also providing the capital to successfully create great wines.
Financing a winery can be challenging—it is not a short-cycle business. It requires an understanding of the entire wine-making process and the working capital requirements and financing needs from planting to selling the wine,” explains James Kenefick, GE Capital relationship manager for Duckhorn. James was able to draw on his almost 20 years of experience financing growth companies and his strong understanding of mid-sized companies to understand Duckhorn's financial needs. Because of this, James has built a strong relationship with Duckhorn and GI Partners.
GE Capital worked with Duckhorn during the recent economic downturn to give them the flexibility to operate in a challenging environment for a premium wine maker. Duckhorn has introduced four new varietals that continue to live up to the Duckhorn name. In 2010, Duckhorn posted its largest revenue and case volume sales year in its history.