Xanadu Normans Wines has sold a Margaret River vineyard, raising almost $3 million as it seeks to consolidate its debt and return to profitability.
Xanadu Normans Wines has sold a Margaret River vineyard, raising almost $3 million as it seeks to consolidate its debt and return to profitability.
The sale of the 44-hectare Jindawarra vineyard, which managing director Sam Atkins described as a non-core asset, comes as the wine company seeks to bed down a $3.5 million convertible note placement aimed at relieving cash-flow issues related to a fire at its warehouse in Margaret River.
The buyer is believed to be Great Southern Plantations, which was seeking an existing vineyard as part of a new managed investment scheme it will be marketing this year.
Xanadu will continue to take the fruit and will retain the Jindawarra brand.
The company remains in negotiations with insurers regarding compensation for the fire but Mr Atkins was confident he was close to ending that.
Mr Atkins denied market speculation that the key Margaret River assets of Xanadu, valued at about $25 million in the books, were on the market.
Instead, he confirmed that a third party had been retained some time ago to analyse the numerous unsolicited bids that came in for the property, which is the closest to Margaret River’s township.
He had received three or four offers since taking the helm of Xanadu a little over a year ago and decided to avoid wasting management time of what turned out to be “tyre kickers”.
“If someone comes along and shows interest, real interest, we will always consider that offer as professionally as we can,” Mr Atkins said.
“It would be interesting if someone put a value on it, that would make my life easier.”
Mr Atkins said his challenge now was to achieve a profit in the next 12 to 24 months, following the recent $9.5 million loss, and re-rate a stock that was languishing with a market capitalisation of about $12 million, despite net assets of close to $48 million, and having raised close to $50 million since listing in April 2001.
He said the past year had been concerned with debt consolidation and making the wineries more efficient. Debt stands at $21.5 million, down from $25.4 million at June 30.
“It has been a year of hard slog. It is an agricultural company, it’s hard to turn around, it doesn’t change overnight. My charter was to fix the problems of the past,” Mr Atkins said.
“In the long term the real goal is to be valued on our operating profit, that is the pay day for shareholders.”
Xanadu’s share price was as high as 38 cents in 2002 but has dwindled to the current five cents.
Since Xanadu listed in 2001 the wine group, which includes operations in Margaret River and Adelaide, has raised at least $47 million.
According to a letter to shareholders dated December 22 2004, the funds are needed to augment Xanadu’s cash flow until the company receives full payment from its insurance company in relation to its May 2004 Margaret River warehouse fire. The company listed this event as a $7.6 million loss in its annual report.
“The consolidated entity is continuing to work through the ‘claims’ procedure with the insurer and at 30 June 2004 has recorded a receivable of $7.8 million. The total claim to date of $9.6 million has been submitted and subsequent to year end Xanadu has received $4.3 million as part-payment against the total claim,” the report says.
According to the convertible note placement letter to shareholders Xanadu directors have committed to taking up $2.25 million of the $3.5 million placement.
