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For Financier, Tech May Be Sweeter Than Wine

Silicon Valley investor William R. Hambrecht is seeking a new credit arrangement to save his Belvedere Winery.

January 16, 2003|Melinda Fulmer and Debora Vrana | Times Staff Writers

William R. Hambrecht has had a lot better luck picking stocks than picking grapes.

The Bay Area investment banker who co-founded Hambrecht & Quist and took public some of the biggest names in technology is now struggling to hold on to his favorite private investment: his prestigious Sonoma County winery.

Hambrecht recently defaulted on a $732,993 loan payment on Belvedere Winery in Healdsburg, Calif., and has hired a Napa Valley consulting firm to sort out his financial troubles and sell some of his 1,000 acres of vineyard property to pay down debts.

The 67-year-old financier had envisioned the wine business as a second career after he sold the famed Silicon Valley investment banking firm in the mid-1990s -- before the tech bust -- for a huge profit. But he hasn't been able to match that success in the wine industry, which is reeling amid a worldwide glut of grapes.

Belvedere has "never proved to be a good operating success," Hambrecht said Wednesday.

But he said he wasn't giving up on Belvedere, or his various investments in wines -- a passion he has indulged in since the 1980s. Hambrecht said that Hambrecht Vineyards & Wineries is close to negotiating a new credit arrangement with the three lenders on the Belvedere property. But it is coming down to the wire. After a 90-day grace period on the default expired, a trustee sale date has been set for Feb. 5.

"We thought we had it together, but it fell apart for a variety of reasons," he said.

The troubles at Belvedere have raised questions among analysts about whether that may be an indication of broader financial issues facing Hambrecht or WR Hambrecht & Co. -- an investment banking firm that he started after selling Hambrecht & Quist.

"It's not a good sign," said Dan Fannon, a research assistant with Jefferies & Co. in San Francisco, referring to Hambrecht's problems with Belvedere. "You clearly don't want to default on a loan. I'm sure it's not something he planned to do."

Hambrecht wouldn't comment about his overall financial situation, saying only: "I think I'm like everyone else in Silicon Valley. We're a lot less rich than we thought we were."

Indeed, compared with the heyday when Hambrecht brought firms such as Apple Computer Inc. and Adobe Systems to the stock market, privately owned brokerages have had slim pickings during the stock slide the last few years.

Last year WR Hambrecht was involved in just a handful of financings, serving as lead manager in only one equity deal -- a $39-million initial public offering in May for Overstock.com, according to data firm Thomson First Call. That meager performance ranked the company 46th among all U.S. brokerage firms for the year, Thomson reported.

"They certainly weren't in a growth mode," said Richard Peterson, market strategist with Thomson. "For firms concentrating in the IPO market, it's dire times."

Hambrecht said he is refocusing on WR Hambrecht. "I'm building an investment banking firm, which has priority," he said. The wine business, he noted, "is no longer a career, it's back to being an investment."

Although Hambrecht said that Belvedere never lost a lot of money, his wine ventures had their share of troubles. His Carneros Creek winery in the Napa Valley had a massive recall of 1998 and 1999 vintages after bad corks tainted much of the wine, costing him millions of dollars.

Word of Hambrecht's winery struggles had been circulating for months in the closely knit wine communities of Napa and Sonoma, with some contractors claiming they hadn't been paid.

One firm, Four Seasons Vineyard Management, had filed a lien seeking $122,000 for vineyard management work at Hambrecht's Rockaway Vineyard in the hills above Geyserville, said Rich Cartiere, editor of Wine Market Report in Calistoga.

"Belvedere has always been a struggling winery," said Cartiere. "They've never gotten the price point they would like to get" for their wine, he said.

To help cover the debts, Hambrecht has placed several properties on the market, including his 125-acre Rockaway Vineyard, listed at $15 million, and the 60-acre Floodgate Vineyard in the Anderson Valley in Mendocino County, which is listed at an estimated $4.5 million.

Even more of the consortium's holdings may be put on the block, said Vic Motto of Motto, Kryla & Fisher, the firm helping Hambrecht reorganize.

Hambrecht said Wednesday that he hopes to hold on to Belvedere, one of his first wine country properties. "I think we'll end up with a business well-financed for the future," he said.

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