Montana tipped to report drop in full-year earnings

Montana Group will release its annual result on Tuesday, along with independent information next week on competing bids for the winemaker.

Montana has a new reporting date in September but a spokesman said it would release its results this year in line with its previous July 31 date.

The report will be released after the market closes on Tuesday.

Montana, New Zealand's largest winemaker, is forecast to report a drop in full-year net profit to $34.7 million from $48 million last year, according to Multex Global analysts.

The company is the subject of a lengthy and increasingly complex $1 billion fight for control by Australasian brewer Lion Nathan and British liquor group Allied Domecq.

Lion owns 63 per cent and Allied 27 per cent, but Lion must sell down to 44 per cent for a breach of Stock Exchange rules when building its stake.

The Montana board will meet on Tuesday with the annual result to be issued after that. The company will release an independent advisers' report on the takeover offers on Friday.

Allied, the world's second largest liquor group, had its long-term A-minus rating put on creditwatch negative this week by Standard & Poor's because of its bid for Montana.

Standard & Poor's said Allied's £260 million ($913.6 million) bid for the remainder of Montana would push down the British company's earnings net interest cover into a BBB-plus range.

Buying Montana, which Standard & Poor's said would lead Allied to assume £40 million of bank debt, would leave Allied firmly entrenched on negative outlook because of another potential acquisition, of Captain Morgan rum.

"Montana, the largest winemaker in New Zealand, would complement Allied Domecq's existing wine operations, which are mostly focused on the United States," Standard & Poor's said.

"Nevertheless, the Montana acquisition would follow several smaller, debt-financed wine and champagne acquisitions implemented in 2001, which have weakened the group's financial profile."

Both sides have accused the other of rule breaches in the battle since February, in which Montana's share price soared to an all-time high of $5.08 this month from $1.70 before the two liquor groups began buying in just over a year ago.

Allied's current full offer of $4.80 a share is in competition with a bid from Lion, which has confirmed it is interested in owning all of Montana.

Lion cancelled its offer for 11 per cent of Montana at $5.50 a share after the Takeovers Panel ruled that this, and a planned offer of $3.70 a share from Lion for the rest of Montana, were effectively one offer at two prices, which is barred by the Takeovers Code.

Montana shares closed yesterday up 10c at $4.60, and Lion ended the week down 4c at $5.21.

- NZPA