Oyster Bay vineyard expects loss

Grape grower Oyster Bay Marlborough Vineyard is warning an anticipated loss for the 2010 financial year may cause the company to fail to meet its banking covenants.

The company's directors were seeking a waiver and would make a further announcement when appropriate, Oyster Bay said today.

The anticipation of a loss was based on likely harvest volumes and current market prices for grapes, although the harvest had not started yet.

A supply imbalance of some varietals was having a negative impact on grape prices being offered by wineries, Oyster Bay said. Oyster Bay was affected as much as any other grape grower, but the company did have beneficial long term grape purchase arrangements with Delegat's Wine Estate, which was required to buy all of Oyster Bay's grapes at market prices.

Negotiations on the price for Oyster Bay's 2010 grape harvest were under way with Delegat's.

Oyster Bay's shares last sold at $2, having fallen from above $3 in September 2008.

- NZPA