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Delhi Wine Club

Posted: Monday, October 27 2008. 10:35

Indage Puts Loxton Deal on Hold

The much publicised purchase of the Australian Loxton Winery, by Champagne Indage has been put on hold as the buyer has not been able to raise the necessary finances to close the deal within the agreed time period.

The A$60 million sale of South Australian winery owned by the third largest winemaker Australian Vintage, previously known as McGuigan Simon was to be completed earlier by September 30 but was delayed due to some regulatory hurdles and rescheduled to close on October 31.

Australian Vintage said last Friday that Champagne Indage had failed to arrange financing to complete the deal. "It's only in the last 24 hours or so that they notified us that they wouldn't be able to complete the purchase by October 31," Australian Vintage chief executive Dane Hudson reportedly said on Friday.

The deal is looking increasingly shaky according to a report. According to several Indian media reports, Indage is now seeking to raise Rs. 1.2 billion ($A37.5 million) in new shares, a herculean task in today's economic scenario.

The financially stretched Australian Vintage has been trying to sell this winery, one of the top five by volume in Australia, for the past 18 months.

According to the news report, Indage also failed to honour an agreement to pay Australian Vintage the $3 million deposit on Loxton last week. "To date we haven't received the deposit but that is part of the discussions we're having with them at the moment," he said.

However, when delWine contacted, Ranjit Chougule, Managing Director of Indage to clarify about the deal, he was quick to respond. ' The deal is not off – but only delayed mutually by both the parties. We are trying to conclude within this year,' he said.

With the current economic scenario it may not be easy to arrange financing for the deal and Australian Vintage might have to look at the contingency plan it claims it has. There may be cancellation penalties which might be enforceable, in case the deal is called off by Indage.

Champagne Indage had established a foothold in Australia through the purchase of Tandou winery in South Australia last year. The announcement in March of the Loxton buyout had created waves in the Australian and Indian wine circles.

Indage shares have nose-dived from a high of Rs. 981 to touch the yearly low of Rs. 146 last Friday, plunging 75% on the Mumbai Stock Exchange during the current economic meltdown. With 14.58 million shares issued and the rupee piercing the Rs. 50 to a dollar mark, the net capitalisation of the company has come down drastically to approximately  $42.15 million.


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