Australian Vintage sells last vestiges of its Chateau Yaldara holding to Seppeltsfield

Australian Vintage sells last vestiges of its Chateau Yaldara holding to Seppeltsfield

The Lyndoch vineyard. Photo: Seppeltsfield

After shoring up $45 million in extra capital through a recent raise and refreshed lender arrangements, winemaker Australian Vintage (ASX: AVG) is pruning back its operations with two agreements that will reduce its vineyard footprint and cost base to clean up a debt blowout

The first and most significant of these is the surrendering of a long-term lease with Belvino for the Balranald Vineyard in the Riverina, whose annual volume of 11,000-13,000 tonnes represents more than 20 per cent of Australian Vintage's grapes crushed from its own and leased vineyards.

With a purchaser secured by Belvino for the property and the announcement yesterday of binding documentation executed to get out of the lease, AVG forecasts this will lead to a net cash flow benefit of $12.6 million over the remaining seven-year lease term.

On a scale that is much smaller but still of symbolic significance for Australian Vintage, which is known for such brands as Nepenthe, McGuigan, Tempus Two and Barossa Valley Wine Company (BVWC), it was also announced yesterday that the group had sold its 230-acre Lyndoch vineyard to Seppeltsfield for an undisclosed sum.

The announcement was released by Seppeltsfield but not Australian Vintage, and at the time of publication the reported vendor is yet to respond to requests for comment. 

Based on figures revealed in ASX documents, at 93 hectares the Lyndoch vineyard may only account for around 4 per cent of the 2,600 hectares Australian Vintage has "under vine", but it is almost a third of its vineyard ownership across the Barossa Valley and the Adelaide Hills.

It is also the last vestiges of its ownership of the historic Chateau Yaldara property, developed by Hermann Thumm in 1946 and acquired in 1999 by Simeon Wines, which merged with McGuigan Wines a few years later before the name was changed to Australian Vintage in 2008.

The property, including the heritage chateau itself, was sold by Australian Vintage in 2014 to businessman Arthur Wang and his company 1847 Winery for $15.5 million, according to reports from the ABC. This was in fact less than the $27.5 million the AFR reported that Simeon Wines paid in 1999, and substantially less when accounting for inflation.

Part of that discrepancy can be explained by Australian Vintage holding onto Lyndoch, which had previously been part of the Chateau Yaldara property.

Seppeltsfield, established in 1851 and part of the broader The Randall Wine Group which also owns Penny’s Hill and Gemtree Organic Wines in McLaren Vale, announced yesterday that it had acquired Lyndoch as a strategic purchase to capitalise on strong demand for luxury wines from the newly reopened Chinese market.

The buyer highlighted that since Chinese tariffs were removed from bottled Australian wines on 28 March, exports have skyrocketed with Australian winemakers shipping $86 million worth of wine to China in the first month.

June was an intensive month of Chinese VIP visitation for Seppeltsfield, with the company's chairman and owner Warren Randall meeting with the number two in China, the Premier of the State Council Qiang Li, and the Chinese Minister for Trade, Wang Wentao.

Randall also met with COFCO Corporation chairman Jun Lyu, COFCO Great Wall Wines chairman Feng Gao, Great Wall Wines chief winemaker Zefu Li, and Changyu Pioneer Wines chief winemaker Dr Li.

"The AVL Lyndoch vineyard acquisition is a strong addition to our already dominant position in the Barossa Valley landscape," Randall said.

"China’s demand for luxury Australian wines prior to the tariffs was very strong and the Lyndoch Barossa Valley vineyard acquisition offered Seppeltsfield an opportunity to fortify our supply volumes of luxury wines for a thirsty market.

"Our vineyard holdings in the Barossa Valley now exceed 4,000 acres, growing 10,000 tonnes, producing nearly 10 million bottles of luxury Barossa Valley wine every year."

The vineyard is planted to mature Shiraz, Cabernet Sauvignon, Mataro and Grenache and the entire crop with be crushed through the 1888 Gravity Flow winery at Seppeltsfield in 2025.

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