16/09/2003 - 22:00

AWH moving into purchase mode

16/09/2003 - 22:00

Bookmark

Upgrade your subscription to use this feature.

AUSTRALIAN Wine Holdings is preparing the groundwork for a major acquisition with a fund raising effort to pay off debt associated with the purchase of Hay Shed Hill Estate for almost $6.3 million last year.

AWH moving into purchase mode

AUSTRALIAN Wine Holdings is preparing the groundwork for a major acquisition with a fund raising effort to pay off debt associated with the purchase of Hay Shed Hill Estate for almost $6.3 million last year.

The company is seeking $4.3 million through a convertible note issue and plans to clear the $2.5 million mortgage on the signature Margaret River property, leaving AWH with just $1.5 million in debt.

Executive chairman Mike Calneggia said that would position the company, currently trading at a market capitalisation of $8 million, for another acquisition.

Mr Calneggia said a purchase up to as much as $20 million was conceivable.

“By the end of the financial year, if we don’t have a significant acquisition on the table it is silly to remain listed,” he said.

However, Mr Calneggia did not regret staying out of the market for major assets, despite considerable market criticism, as a number of asset hungry groups appear to be coming unstuck.

“People are always saying we are not growing quickly enough,” he said.

“We believe that in the boutique wine business you have to be patient.”

In 2002, Mr Calneggia led a restructure of AWH after the apparent financial failure of an acquisition spree, which added to the company’s then flagship brand Hotham Wine.

Hotham has since been shelved as a brand and only one of the previous management’s purchases, Alexandra Bridge, remains in the AWH core stable – centred around more recent purchases Chestnut Grove, Hay Shed Hill and their spin-off labels.

Alexandra Bridge and Chestnut Grove secured five trophies between them at the recent Perth Royal Show awards.

Mr Calneggia said the convertible note issue, managed through corporate advisers Grange Consulting Group, was unusual because, after paying off the bank debt, noteholders would have first mortgage security.

He said the arrangement was a compromise between AWH’s preference not to own land and the integral part the property played in the Hay Shed Hill brand.

To add value to that brand, the company was looking at using some of the property for tourism, with high-end accommodation and a conference centre a possibility.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options