By Andrew Starke
Cockatoo Ridge Wines has gone into voluntary administration after its board concluded that the company was likely to become insolvent in the third quarter of the current financial year.
Worryingly for the Australian wine industry, the decision comes despite Cockatoo Ridge reporting strong cash flow figures for the December trading period.
The company, which has its cellar door in the Barossa Valley, experienced a turbulent 2009 after a promising 2008, when the creation of a joint brand and distribution partnership with Australian Commercial Wines yielded strong growth.
The South Australian company produces sparking, white and red wines under the Cockatoo Ridge brand and other brands including Normans and Griffith Park.
Cockatoo Ridge was technically in breach of its loan covenants in June last year but had been in negotiations with its bank, GE Commercial, to reduce debt levels.
However managing director Peter Perrin resigned in November 2009 and the company called a trading halt on the Australian Stock Exchange (ASX) in December.
Its shares have remained suspended ever since.
“Cockatoo Ridge Wines Limited advises that, having considered third quarter trading conditions the company is expecting to encounter, the directors have formed the view that the company and its subsidiaries Australian Commercial Wines Pty Ltd, Cockatoo Ridge Sales Pty Ltd, Cockatoo Ridge Pty Ltd and Playford Wine Holdings Pty Ltd are likely to become insolvent in the third quarter … ”, said the company in a statement to the ASX.
The final straw for embattled wine company is believed to have been board concerns on whether they could commit to February grape-buying contracts and how this would be financed.
Cockatoo Ridge chairman, Stuart Richardson, who took over the role from Ivan Limb in mid-2009, had introduced cost-cutting measures after a failed attempt to sell the company.
The board has appointed George Divitkos and Russell Henry Heywood-Smith of BDO Kendalls as joint administrators.
A decision on the future of the company and its 28 employees will be made next month.