Avl Sells To India To Pay Debt
The Age
Thursday March 20, 2008
INDIAN vigneron Champagne Indage will make the largest foreign investment in Australia's wine industry since the grape glut started to clear a year ago, after announcing plans to purchase Australian Vintage's Loxton winery for $60 million.
Australian Vintage, formerly known as McGuigan Simeon, said yesterday it had signed a deal to offload its second-largest winery and Australia's fifth largest to Indage within six months, pending due diligence. "We're pleased that we're able to find a buyer and sell at a price we're comfortable with," AVL's chief executive, Dane Hudson, said. Mr Hudson said $40 million from the sale of the 90,000-litre winery in South Australia's Riverland would go towards reducing the company's debts of about $150 million. The rest will go towards upgrading AVL's remaining 150 million-litre winery in the Hunter Valley in NSW. Shares in AVL closed steady at $1.32, despite Mr Hudson saying that the sale would help his company ditch under-used assets. The deal follows AVL's sale of its Griffith winery to Yellowtail winemaker Cassella Wines for $10 million in November. Mr Hudson played down concerns that the company's debt levels were too high, even after the asset sales. "We've had no issue servicing it at all," he said. The sale follows AVL and Macquarie Group chairman David Clarke's recent comments that the Australian wine industry had "turned the corner". Indage said its purchase of Loxton was part of its plans in "going global". The group, which claims to account for 70% of India's wine sales, made its first step outside India last year when it purchased Tandou Wines in the Riverland district in September, which it has renamed Thachi. Indage's managing director, R. S. Chougule, in his company's annual report, said the Thachi purchase was the "first small step towards a giant stride ahead" in the group's five-year plan to have production facilities in 10 countries. Indage has 2630 hectares of vineyards in India and is valued at $195 million on the Mumbai Stock Exchange. The group's chief financial officer, Rajesh Chalke, said Indage wanted to establish production facilities in countries such as Australia, Argentina, France, Italy and South Africa, where domestic consumption was strong. He said some bulk wine would be shipped to India.
© 2008 The Age
