If there is one thing Palandri Ltd chief executive Darrel Jarvis has in abundance, it is unbounded optimism about the future of his Margaret River wine business.
If there is one thing Palandri Ltd chief executive Darrel Jarvis has in abundance, it is unbounded optimism about the future of his Margaret River wine business.
At a time when most wine producers are drowning in a wine surplus and bleeding red ink, Palandri is focused on planting new vines to deal with a projected shortage of semillon and sauvignon blanc grapes.
To support its planned growth, Palandri announced last week it would delist from London’s Alterative Investment Market and float on the Australian Stock Exchange.
It also announced a big increase in net profit to $4.1 million, though the complex structure of the group meant the parent company’s headline profit told only part of the story.
Mr Jarvis said Palandri was planning to raise additional capital in conjunction with its listing on the ASX next year.
“We aren’t just changing our listing to the ASX, there are a lot of other things happening,” he told WA Business News.
The planning capital raising would be on top of the $30 million the group has raised from investors in the past year.
Most of the money was raised through the group’s managed investment schemes; the Palandri Winegrape Project 2005-06 raised $15 million and the Palandri Agricultural Property Trust raised $5.5 million.
In addition, Palandri Finance raised $12 million, which it used to make loans to investors in the MIS projects.
The most immediate challenge facing Palandri is to refinance an $11 million loan from its main financier, Canada’s Maple Com-mercial Finance, which is due to be repaid in full by June 30 2007.
Mr Jarvis said he was close to finalising negotiations with another financial institution, which would allow the debt to be repaid.
He said the refinancing of the Maple debt meant funds currently being raised by Palandri Finance could be used for other purposes.
This would be a change from plans announced in August, when Palandri Finance said it was seeking to raise up to $15 million to repay the Maple debt and other loans.
Mr Jarvis said refinancing the Maple debt would also allow the group to proceed with the sale of its main winery at Frankland River to the Palandri Agricultural Property Trust.
The trust has already bought the Palandri vineyard at Harvey (valued at $3.4 million) and would use a mix of equity and debt to buy the Frankland River vineyard (valued at $7.5 million).
The trust had been aiming to raise up to $20 million but, when it last reported in June, had raised only $5.5 million.
While Mr Jarvis is confident about the group’s financial future, Palandri was forced to obtain a three-month bridging loan from director John Ratcliffe last month so it could repay a portion of the Maple loans.
Separately, Mr Jarvis has previously loaned the company $1.9 million.
Palandri’s audit firm, Bentleys MRI, said the refinancing meant there was inherent uncertainty about the ability of the group to continue as a going concern.
Despite these challenges, Mr Jarvis said the group was planning significant growth initiatives, including in China.
“Don’t expect the rate of change to diminish but rather look forward because that is where we are charging ahead,” he wrote in the company’s annual report.
