Australian Vintage shares suspended

Australian Vintage, owner of Tempus Two and McGuigan Wines amongst others, has requested its shares be suspended on the Australian stock exchange after talks with Accolade collapsed this week.

With debts expected to rise to AU$70-75m by the end of June, up from previous estimates of AU$43-50m, Australian Vintage was hoping that a deal with Accolade Wines would rescue them. However Accolade pulled out of negotiations after growers rejected Accolade’s offer to restructure long term contracts.

It is thought there is a chronic oversupply of red wines in the hot inland area of Riverland which produces around 10% of Australian crops. With lower demand for Aussie reds, many big wine companies are stuck with contracts to buy too many grapes and is putting significant financial pressure on them.

Rabobank claims Australia had an oversupply of around 2 billion litres last year and Accolade Wines CEO Robert Foye recently told the Australian Financial Review that the current situation “simply isn’t sustainable”.