This post covers questions sent to Cult Wines Ltd yesterday as well as a look at who has legal control over the wine portfolios held by Premier Cru Fine Wine Investments Ltd.
Questions to Cult Wines Ltd:
Yesterday I sent request to Philip and Tom Gearing, the directors of Cult Wines Ltd, to answer some questions. As is their right, they declined to answer the questions at this time. Chris Mercer at Decanter magazine was later told that Cult Wines are bound by a confidentiality clause until 15th August. Unfortunately clients of Premier Cru have until 14th August to accept the proposal from Cult Wines Ltd ...
Questions I put to Philip and Tom Gearing of Cult Wines Ltd:
Questions I put to Philip and Tom Gearing of Cult Wines Ltd:
a)
Cult Wines Ltd will be charging Premier Cru clients a 5% management fee
for the first two years? Are there additional advantages to being with
Cult Wines that have not been covered in the emails received by clients
of Premier Cru?
b)
Has Cult Wines Ltd paid Premier Cru for the right to handle clients
portfolios? If so what was the sum involved and when was this agreement
concluded? If no money was involved when was the agreement made?
c)
What is the name of the company that is handling the arrangements to
put Premier Cru Fine Wine Investments Ltd into liquidation?
d) Do you have any indication how the liquidator will view the wine in Premier Cru clients' accounts?
e) In your email to investors (7.8.2014) you mention a shortfall in some of Premier Cru clients portfolios.
What is the value of this
shortfall?
Is
this shortfall down to en primeurs that have yet to be delivered or is
there a shortfall in bottled wine that should be clients' portfolios? If
this is the case do you know why wines are missing and how much is
missing? To what value?
f) If there is bottled wine missing is it ethical for Cult Wines Ltd to be offering 2013 Bordeaux en primeur as a replacement?
•••
Further reflections and questions including who has legal control over the wines:
One further question I could have asked is: what have you been told by Premier Cru about the 'shortfall' in clients' portfolios? What reasons for the shortfall have you been given?
One further question I could have asked is: what have you been told by Premier Cru about the 'shortfall' in clients' portfolios? What reasons for the shortfall have you been given?
.. and another on the 5% management fee. What additional expenses to Cult Wines Ltd are involved in the transfer that justify imposing a management fee of 5% for the first two years that you admit is 'so high'?
-
Why are the fees so high moving to Cult Wines?
Service Fees – In order to explain the
rates being quoted for years 1 & 2, our 5% annual charge for years 1 &
2 are linked to a reducing liquidation fee so should you decide to exit on
either year 1 or 2 the total cost will not exceed 10% which matches the current
cost for liquidating your portfolio at the prevailing market rates
'a reducing liquidation fee'
One well-placed observer has commented that the handover 'appears to be a shambles'.
It is not clear that Premier Cru Fine Wine Investment Ltd is actually going into liquidation or will just be wound up. The only mention of a liquidator in any correspondence I have seen is in the email sent from Cult Wines Ltd to Premier Cru clients sent on 8th August. The letter from Premier Cru (31st July 2014) makes no mention of a liquidator.
It is crucial to know who has currently legal control over the wines clients portfolios held in Premier Cru's umbrella account at EHD as whoever has control can release the wines to Premier Cru clients assuming that title was clear.
From the Premier Cru letter (31st July 2014) appears that Premier Cru Fine Wine Investments Ltd still has legal control over their clients' wines stored at EHD as the agreement with Cult Wines Ltd is not due to be finalised until 14th August.
'We have therefore undertaken a review of our market competitors and have concluded that Cult Wines, who are currently the UKs leading fine wine investment company as the best positioned to assume management of your portfolio and on this basis we are finalising an agreement to migrate our private clients to Cult Wines (PCI) Limited which we hope to complete by August 14th 2014.'
It is interesting that there is no mention of a liquidator here. Premier Cru Fine Wine Investments Ltd has legal control over the wines until 14th August 2014. After that date legal control will be with Cult Wines Ltd assuming that the agreement is finalised as envisaged.
Assuming that title to their wines can be established, then Premier Cru ought to be able to release wines up to 14th August to their clients who do not want to accept Cult's proposal and want to make their own arrangements. From 14th August it would appear to be Cult Wines Ltd, who will be able to release wines.
From Premier Cru to their clients (31st July 2014):
'To help us complete the transition to Cult Wines as quickly and as smoothly as possible, please confirm your agreement to the transfer of your account to Cult Wines by no later than August 14th 2014. All you need to do is reply to this notice indicating that you would be content to transfer your account to Cult Wines. If we do not receive any reply to this notice by August 14th 2014, we will assume that you do not object to this transfer.'
The inferred advice from Premier Cru to their clients not wishing to accept Cult Wines Ltd's proposal is to contact them (Premier Cru) 'no later than August 14th 2014 declining Cult Wines Ltd's proposal and asking for their wines to be transferred to whatever arrangements individual clients are making. This notification may have to be done through Premier Cru's registered office.
The address of Premier Cru (Fine Wine Investments) Ltd registered office is:
Barnes Roffe LLP
3 Brook Business Centre
Cowley Mill Road
Uxbridge
Middlesex UB8 2FX
Tel: 01895 256423
http://www.barnesroffe.com
http://www.barnesroffe.com
