West Australia listed wine company Evans & Tate requested a trading halt this
morning following yesterday’s heavy trading of 4.5 million shares and a
plummeting price that has seen the company shrink to a third of its value since January.
Last Tuesday Xanadu Wines, also based in West Australia, requested its
shares be suspended. Later it announced the sale of major assets to a
subsidiary of RW Group Pty Ltd, a company
associated with the Rathbone Family – owners of Yering Station, Mount
Ghiran and Parker Estate. The deal is $26.16 million for its Margaret
winery, restaurant and vineyards, along with the brand and the select
relating to the Xanadu brand. After paying bank debt
said to be $14.5 million, this will leave 1.5 million litres of wine,
shell, an uncertain future and many out-of-pocket investors.
Palandri, another West Australian wine
producer, was unsuccessful in listing on the ASX and sought solace by listing on the
UK Alternative Investment Market June 2004 at 32p. It hit a year high of 40.5p and
closed last night at 15p. Currently major shareholder and group chief executive
Darrel Jarvis and CEO of Palandri Wines Gordon Grant are in the UK seeking new
investors outside of the financial institutions.
All three companies were supremely
confident in their ability to make, market and sell wine in the
domestic $15 /UK £8 and above
glamour sector. Palandri claimed that for every dollar it spent on
wine, it would
spend a dollar on marketing. The trouble is that the glam sector is
small and there are heaps of quality grapes making vast amounts of good
wine. Also, upmarket Aussie wine companies have been affected by the
uplift in quality from other wine-producing nations, a strong dollar
and the power of UK and domestic
retailers. The glam sector found itself less niche with many more
Evans & Tate and Xanadu looked to the
lower end of the market with E&T acquiring Cranswick Estate for around $100
million in 2003, while Xanadu went
after the troubled Normans Wines in 2004, resulting in its present
predicament. Meanwhile, it appears the major interest generated in the UK for Palandri
shares is from Darrel Jarvis himself, who in three trades this month has bought
210,148 Palandri shares at 20p a pop, lifting his holding to 27.87%.
Read more about the wine industry in The Key Report here.