Keys, editor of wine industry mag

The Key Report

, writes:

estimated around 200 grape growers in the Murray Valley
(Vic/NSW) and Riverland (S/A) have received “Notice of suspension of contract”
letters from McGuigan Simeon. Although the notice also says growers are free to
find other buyers, that is unlikely in the current oversupply situation, and up
to 70,000 tonnes of fruit will probably find its way to the spot market.

If this
happens, it’s possible that prices will drop to below the cost of production.
Meanwhile Brian McGuigan, who has announced his departure from the company, has
entered into a new financing arrangement with Macquarie Bank Limited. This
arrangement includes the purchase by Mr McGuigan of put options over 3,250,000
McGuigan Simeon shares to mature in February. There are also put options on
other shares maturing at later dates bringing the total to 8,250,000. Astute of
Mr McGuigan to protect the value of his shareholding whilst the company is
effectively devaluing the value of the coming wine grape crop.