On Thursday unit holders will vote on the future of Australia's International Wine Investment Fund, deciding whether the fund will continue or be wound down. Chris Brook-Carter reviews the lead up to the vote and assesses the arguments for and against.

Within the next few days we will learn the fate of the world's largest wine fund, as unitholders vote on whether Australia's International Wine Investment Fund should be wound or begin planning for future investments.

It is a debate that has been raging since the Fund sold its 18.3 million shares in BRL Hardy to Constellation Brands in January - a move that left the Fund some A$143m in cash and A$50m in Constellation shares.

Considering its past success it is unsurprising then that IWIF's management team have already voted in favour of continuing to move the fund forward. But a vocal group of unit holders led by the controversial stockbroker Rene Rivkin want it wound up, convinced it has had its day.

The Fund is run by Berren Asset Management whose CEO Chris Day has been conducting a series of unitholder meetings across Australia arguing the case for continuation. However, he has been opposed along the way by Rivkin and his supporters, who argue that the nature of the Australian wine industry has changed. They believe unitholders would be best served if the Fund's assets were now sold off.

Although Berren has proposed a A$1-a-unit special dividend, others believe the units would be worth more than A$2 in the event of a sale of the fund's assets, which include significant holdings, totalling more than A$40m, in Foster's (brewing and wine), Evans and Tate, McGuigan Simeon, Reynolds and other Australian and international wine interests.

As one long-time wine industry player put it in the Australian press last week: "IWIF's risk profile has changed and it's appropriate to pause and re-assess the future of the fund."

The man fronting Rivkin's corner is Gary Mares, an accountant who has been described by the country's press as a "corporate heavy".

He has not only taken issue with the fund's future but also with the manner in which it is being run by Berren, criticising the more than A$3m in management fees, transaction success fees, expenses and consultancy fees paid to Berren and one of its directors, Mark Davison, in the year to June 30, 2002.

However this is a criticism that Day has dismissed saying the fees were in line with unitholders' interests and were less for the most recently completed financial year.

Day, for his part has been travelling the country putting his case forward, arguing that Australia's troubles at present are only part of the cyclical nature of the wine industry.

"The wine industry for Australia and internationally is going to be a good industry for a lot of years to come," he said last week.

"We understand ... that this is a cycle. This is not anything different to what's happened probably five or 10 times in the last 50 years, including retailers having more power than the producers, including there being too many grapes in some countries and not enough grapes in other countries."

Talking to just-drinks he argued that it could take up to 18 months to sell the IWIF's remaining assets, which had been bought as long term investments. "We are only just in the take-off curve. If we said 'let's just wind up this thing', I could suggest we would lose a lot of money," he said.

And only last month he had told just-drinks: "We (IWIF) are unique in the support of the wine industry in the world. We are able to work with medium and large wine companies to benefit from the inevitable consolidation that is and will continue to occur for the next 10 years (at least).

"The Wine Fund understands the unique characteristics of the Wine Industry and can hopefully invest in the businesses that will succeed with the key characteristics that matter in the 00's - route to market and brand/brand marketing."

Day already has plans for a A$10-20m new wine investment if shareholders vote to continue its operation, he says. But he would not divulge further details ahead of the July 24 meeting.

However, he has been quoted in the last week saying that another BRL Hardy-like company will emerge from the Australian industry, which if the IWIF can get in on it early, will reap the same kinds of rewards in the long term for shareholders as BRL.

He is also proposing that the fund's unitholders approve a motion to turn the fund into a listed company, saying it would be easier for shareholders in Australia and overseas to understand a single franked dividend from a listed company.

Both Day and Mares are outwardly confident of a result in their favour. But from outside it remains difficult to call. Mares has said he believes a large number of unitholders will be too apathetic to vote. Meanwhile his supporters, including Rivkin's share, control around 15% of the units and Mare has claimed he holds enough proxy votes to "give it a good shake" when the vote comes along on Thursday.

But Mare will need to acquire 50% of all votes, in an extraordinary resolution that will need at least 50% of all shares to be voted, if the resolution to wind the fund down is to be successful.

Day, meanwhile, says he is confident of achieving more than 50% in his favour and news today that Constellation is on the verge of acquiring a 15.4% stake in the fund from Grant Samuel will have boosted his position.

However, it is likely to come down to the large number of small "mum and Dad" shareholders, many of which are grape growers in the Riverland region South Australia. A number are relying on the Fund as a long term investment but their motives are difficult to read, with their reasons for voting as likely to be emotive as financial.