Vineyard challenges big players

By RICHARD BRADDELL

The Crossings, a vine-to-wine company to be created from two Marlborough vineyard partnerships, aims to take on international markets after first raising $7 million in new capital.

The float is promoted by Farmers Mutual Group offshoot Farmers Mutual Investments and is conditional on the partners in the Medway and Brackenfield vineyards on the banks of the Awatere River agreeing to convert their units into shares.

They will then have preferential rights to a $7 million issue of new capital. Although that will be at a 10 per cent discount, it is expected most of the stock will be available to the public.

With the addition of 63ha to be planted in The Crossings vineyard next year, the company will have 140ha under cultivation, or enough to put it in the same league as Delegats, Babich and Matua, according to Richard Bowling, the principal of the new company's manager, Marlborough Contract Management.

The Crossings production (17 per cent has been planted in pinot noir with most of the rest in sauvignon blanc) is intended solely for export using California-based International Wine Associates to market the wine in the United States, Britain, Canada and Japan.

However, Mr Bowling said the plans depended on factors such as the share float and market conditions when grape production was completely on stream in three or four years.

Close to $4 million of float proceeds have been allocated to build a winery, but it might ultimately be determined more prudent to send grapes to a contract winemaker.

Production at present is sold to a company representing Matua, Babich and Nautilus wineries under contracts that wind up next year.

Medway and Brackenfield investors have paid $4.7 million for holdings valued in the float at $5.9 million.

In addition to being offered the new 100c shares at 90c each, they will get 1.2 shares for every 100c of value they hold in the partnerships.

With the exception of convertible preference shares being offered to existing partners, dividends are not expected until 2005.

Float expenses are $840,000 and Farmers Mutual Investment Services will be paid an annual financial management fee of $175,000.