KEY POINTS:
Troubled Martinborough-based Te Kairanga Wines has got the nod from its shareholders to sell $5.5 million of new shares.
At the company's annual meeting yesterday, the go ahead was given for a $4.5 million rights issue, with three new $1 shares for each two shares now owned.
It
was also agreed that former Montana Wines managing director Peter Hubscher should be able to buy a further million $1 shares.
Chairman Roger Taylor and two of the company's directors told shareholders that if the rights issue was not approved Te Kairanga could be forced to cease trading.
The company needed additional capital to finance ongoing activities, as it was facing financial difficulties and was under pressure from its bankers to reduce debt, they said.
It was intended that by raising additional capital, and by appointing Mr Hubscher as executive chairman, Te Kairanga would be better placed to trade out of its present financial situation.
Mr Taylor said today the new money would be used to increase production.
Appointments to the senior positions of wine maker and chief executive would also now be made, Mr Taylor said.
He attributed the company's problems to two low harvests in the past three years, along with difficulties obtaining contract grapes.
The high value of the New Zealand dollar had affected returns from overseas sales, while problems with volume consistency meant the company had not been able to "push the market as we could have".
Issues were now being dealt with, and Mr Hubscher ha d already sourced significant quantities of contract grapes, Mr Taylor said.
The current season's harvest was also looking more normal so far.
The rights issue is being fully underwritten by the company's two largest shareholders - Rangatira which has a 32.5 per cent stake, and Hettinger Nominees which holds 14.1 per cent.
"Everybody is very excited about the future, to have these two major shareholders giving such a strong vote of confidence," Mr Taylor said.
The future was looking extraordinarily good, although there was always an element of risk.
In the year to the end of June Te Kairanga reported a net loss after tax of $2.17 million, compared to a loss of $287,000 a year earlier.
Income from sales in the latest year was $4.1m, up from $2.33m.
- NZPA