Awatere Vineyard debts put at $24m

One of the biggest victims of the wine industry's woes, Marlborough's Awatere Vineyard, owes creditors more than $24 million.

Awatere Vineyard Holdings Ltd and sister company and lessee Awatere Vineyard Estates Ltd were placed into receivership on June 1 by Westpac after defaulting on a loan.

The vineyard, owned by Aucklander Barry Sutton, is believed to be the first big contract grower to have fallen over as a result of plummeting prices following the 2008 oversupply.

In the past two years contract prices have dropped by about 50 per cent.

The price per tonne this year was around $1200, but dropped to as low as $350 on the spot market. In 2008, contract growers were getting above $2400 a tonne.

Some industry commentators predict Awatere is the first in a string of Marlborough contract growers likely to go under.

Yesterday, the receivers' first report showed Awatere Vineyard Holdings and Awatere Vineyard Estates owed a combined $24.71 million, excluding an inter-party loan of $3.12m.

Most of money, $21.97m, was owed to Westpac through a loan and overdraft facility. Another $1.96m was owed to Lancewood Developments, which is also owned by Sutton, and more than $568,000 to Inland Revenue.

Yesterday, Sutton said irrigation problems meant the vineyard sold its first harvest in 2009 just as sauvignon blanc prices plummeted to $1600, down from $2300.

"That really put us on the back-foot and turned a $15m debt into a $21 million debt," he said.

In 2010, the vineyard had supplied 1000 tonnes of sauvignon balance to Montana and Villa Maria at $1300 a tonne, below the cost of production, he said.

The receivers, accountants McGrathNicol, have continued to run the vineyard as a going concern and will look to recoup much of the debt through a mortgagee sale.

Awatere Vineyard Holdings owns 299 hectares of land, with 128ha planted with sauvignon blanc and a small area of pinot gris.

The receivers have valued the holding company's assets at $27.29m, excluding the inter-party loan, and the lessee company's assets at $426,808.

The land, excluding developments, is valued at $21.1m.

This would appear to cover the vineyard's debt but the receivers have said it is too early to say how much will be available for creditors.

- © Fairfax NZ News