Casella Wines rules out IPO

Published 31 January 2013 09:17, Updated 18 February 2013 12:48

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Casella Wines rules out IPO

Cassella Wines managing director John Casella says “if you ever want to bring in a partner or do a listing you do that at the peak.”

Casella Wines managing director John Casella has ruled out an equity raising or stock market listing as a way to reduce the Yellow Tail winemaker’s debt burden and gain breathing room with its banks.

Mr Casella will return to Australia on the weekend following a business trip to the US, where he said sales of his product remained strong.

Casella plunged to its first loss in 20 years as it struggles against the strength of the Australian dollar.

Mr Casella said volumes in the US were down just 0.2 per cent in the past 12 months.

Casella, Australia’s biggest wine exporter, breached banking covenants during fiscal 2012 but the National Australia Bank gave the group a reprieve until January 30.

Mr Casella said he would hold discussions with the NAB next week. Casella has total liabilities of $191 million. Current borrowings stood at $138.4 million at June 30 2012.

He said he was not interested in bringing in an equity partner or listing the company, which would generate cash to repay NAB.

Mr Casella’s parents, Sicilian immigrants Filippo and Maria Casella, founded the winery in 1965.

“If you ever want to bring in a partner or do a listing you do that at the peak,” Mr Casella said.

“You don’t do it in distress. You might need to if you are really in distress. At this stage everything is going well. We are trading ok. We are not the only ones [hurt by the currency],” he said.

Accounts lodged with the Australian Securities and Investments Commission show Doug Rathbone’s Rathbone Wine Group sank to a $13.1 million loss in 2012.

The accounts do not include his entire winery portfolio but give some insight in to the trading conditions.

Mr Rathbone and his family own Yering Station, Xanadu and Mount Langhi Giran and recently sold Parker Coonawarra Estate.

Mr Rathbone put his wineries on the market a year ago as challenging conditions in the wine market collided with a horror run for Nufarm, where he is managing director.

A shock to the Nufarm’s profit decimated the group’s share price in 2010 and forced the suspension of dividend payments, which resumed last year.

Mr Rathbone’s Nufarm shares form part of the wine group’s assets. He owns about 4 per cent of Nufarm.

However, the company agreed to sell Parker Coonawarra for an estimated $6 million to $7 million last month.

Mr Rathbone told the Australian Financial Review in January that he intended to remain in the wine business.

He said the sale of Parker and improved trading conditions at Nufarm had improved the outlook for the group.

The Rathbone Wine Group accounts show revenue increased 7 per cent to $37 million in the 12 months to June 30 2012. It had a $13.1 million loss compared to a $24,309 profit in 2011.

The accounts show current borrowings of $1.1 million and non-current borrowings of $54.5 million. Total liabilities stood at $66.4 million against total assets of $208 million, which include shares in Nufarm worth about $56 million at June 30.

Mr Rathbone is working to refinance the wine group’s debt with Australian and New Zealand Banking Group.

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