One look at the last two months of ASX statements for Australian Vintage Limited (AVG), highlights that this has been a very busy time for the winemaker, but The Shout has been told that the business is in good hands and its financial position has been stabilised.
At the beginning of May the then CEO Craig Garvin was dismissed from the business for undisclosed behaviour that was “inconsistent with the values of the company”, he was replaced by Interim CEO Peter Perrin.
This was soon followed by the news that AVG was surrendering its long-term lease with Belvino for the Balranald vineyard, to provide AVG with “flexibility in its sourcing strategy in a changing consumer environment”.
On May 27 AVG requested a voluntary suspension of its ordinary shares on the ASX, with the business looking to raise capital after announcing that debt levels could be over 50 per cent higher than previous estimates. That announcement came as AVG confirmed that its talks with Accolade over a possible merger had ended without an agreement being reached.
Shortly after that, on 11 July, AVG set out its capital structure initiatives, which would strive to raise equity and recalibrate net debt to give the business more financial flexibility.
Following a successful equity raise and net debt restructure, the AVG Chairman, Richard Davis, resigned with non-executive chairman stepping into the Interim Chair position.
Acting CEO Perrin, said: “On behalf of the entire Board and Executive Committee, I would like to thank Richard for his dedication and service to the company over more than 15 years. He has made an invaluable contribution and will be missed.”
Vineyard sale
At this time it was announced that The Randall Wine Group and its Seppeltsfield winery was purchasing the 230-acre Lyndoch vineyard in the Barossa Vally from AVG for an undisclosed amount.
Seppeltsfield’s said its strategic purchase of the AVL Lyndoch vineyard was to specifically feed the newly created demand for luxury Australian wine to China.
Seppeltsfield Executive Chairman and Proprietor, Warren Randall said: “The AVL Lyndoch vineyard acquisition is a strong addition to our already dominant position in the Barossa Valley landscape.
“China’s demand for luxury Australian wines prior to the tariffs was very strong and the Lyndoch Barossa Valley vineyard acquisition offered Seppeltsfield an opportunity to fortify our supply volumes of luxury wines for a thirsty market.”
AVG subsequently announced its capital structure initiatives helped the business raise approximately $45m. This was broken down by $15m raised through the placement and institutional entitlement offer, $15m as an extension of the existing National Australia Bank (NAB) debt capacity from the end of July 2024 to November 2026 and $15m of additional short-term debt capacity from NAB. Of this last $15m, $5m is repayable in November 2024 and $10m in November 2025.
Financial position stabilised
Speaking about what this $45m capital raise means for the business, a spokesperson for AVG told The Shout: “The successful capital raising has stabilised AVG’s financial position. It provides AVG with more adequate levels of liquidity and financial flexibility to navigate the current volatile industry conditions and enable the business to capitalise on future opportunities, including potential consolidation.
“The placement and institutional entitlement offer drew strong demand from a range of existing and new investors, while the Company is pleased with the support demonstrated by its existing lender.”
With the financial position stabilised, the spokesperson told The Shout that AVG was continuing its search for a new CEO and Chair.
“AVG is in good hands with the highly experienced Peter Perrin, who has been in the wine industry for 40 years, as acting CEO and John Davies, a finance industry veteran, as interim chair,” the spokesperson said.
“The search for a permanent CEO is continuing and the Board has commenced the search for a permanent Chair as part of the Board renewal process.”
Industry conditions remain challenging, however AVG is bullish in its outlook stating it is continuing to grow market share in core and emerging geographies and that it is the “global leader in ‘no-and-low’ supported by [its] technology.
The Shout will continue monitoring AVG performance in all areas and will keep you up-to-date with developments.