09/10/2009 - 15:32

Gt Southern wine schemes to be wound up

09/10/2009 - 15:32

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Receivers McGrathNicol has recommended that Great Southern's 2008 wine grape income project be wound up after it determined that a minimum of nearly $8 million would be needed to produce a 2010 vintage.

Receivers McGrathNicol has recommended that Great Southern's 2008 wine grape income project be wound up after it determined that a minimum of nearly $8 million would be needed to produce a 2010 vintage.

In an update to investors this afternoon, McGrathNicol said it had engaged a consultant Davidson Viticulture to review the vineyards within the scheme to assess funding requirements needed for the next harvest.

In its report, the consultant said that since offtake deals have been terminated since Great Southern went into administration, any sales of grapes would be at prevailing market prices.

"Due to poor grape prices and the high cost of irrigation, the majority of vineyards within the Scheme are not economically viable in the current market," it said.

Meantime, the Davidson estimated that about $8,000 to $10,000 was needed for each hectare of the scheme to produce a harvest next year.

"This implies a funding requirement of approximately $7.8 million for the Scheme, before capital expenditure, overheads and water allocation costs."

In addition, McGrathNicol calculated that about $97 million was needed to maintain the schem over the projected 20 years of the scheme.

An extra $43 million would also be required to cover the expected shortfall in sales.

With no proposals for the scheme, McGrathNicol said there was no other alternative but to wind up the project.

Funding for Great Southern's assets ceased at the end of last month, however McGrathNicol has previously said it has secured limited funding for several other schemes.

The receivers are currenlty assessing offers for various assets of Great Southern.

 

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