Questions remain over Yealands sale

Marlborough Lines should focus on core business, say critics of the Yealands purchase.
DEREK FLYNN/FAIRFAX NZ

Marlborough Lines should focus on core business, say critics of the Yealands purchase.

More questions are being asked on the purchase of Yealands Wine Group by Marlborough Lines.

Both Kaikoura MP, and former New Zealand Winegrowers chairman Stuart Smith, and winegrower John Forrest, remain unconvinced the deal was in the best interests of the community.

The pair say a number of questions remain unanswered from the lines distribution company board of directors after $89 million was paid to buy 80 per cent of YWG a fortnight ago.

The purchase was made about the same time as two Marlborough Lines directors, James Hay and Anthony Beverley, resigned from the board.

"There has not been an explanation yet as to why these two men resigned," Smith said.

"It would be a fair assumption by the public to link the purchase of Yealands to the resignations, and most people would draw a conclusion that the two events are linked.

"If the events are linked then it is hard to conceive that they are linked in a positive way," he said.

Neither Beverley nor Hay would comment on why they are no longer on the Marlborough Lines board of directors.

The Marlborough Electric Power Trust which appoints the board of directors has placed newspaper advertisements calling for suitable candidates to apply.

Smith said the level of debt carried by YWG was another unclear issue.

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Marlborough Lines was a monopoly company owned by the community, and as such the community should be part of the discussion, he said.

"Is it a wise investment by Marlborough Lines to get involved in a high and multi-risk industry when they have skills in other low-risk areas?," he said.

Smith said as the MP fo the region he was asking questions he was being asked daily by his constituents.

Forrest, managing director of Forrest Wines, said that as a Marlborough Lines shareholder he was worried what debt level had been taken on by the lines company with the purchase, and why any inquiries by the media had not been fully answered.

The Marlborough community were questioning the sale, he said.

"What is their total debt and what will be the level of loan the new company will be be able to borrow up to?

"It needs to be made clear if Marlborough Lines had placed any security over the assets of the company which could put at risk the $89m already invested and the debt level cannot be serviced."

What other costs had the Marlborough Lines taken on as undisclosed commitments, such as sponsorships, and wine promotions, Forrest said.

"What assurances have the community got that forward commitments for wine orders will be sold profitably?"

The community should have been involved in a more thorough consultation process over where investments could, and should be made, he said.

"Shareholders have been treated rather flippantly under this sale process."

 - The Marlborough Express

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