Australia's Wine Investment Fund announced today that it is to acquire the David Traeger winemaking business in an agreement with Dromana Estate Limited.

Dromana Estate will acquire 80% of the business and the Wine Investment Fund 20%. The previously announced arrangement to establish a joint venture to produce wines under David Traeger labels will now not proceed.

The Wine Investment Fund said in a statement that the acquisition is subject to shareholder approval allotting 2,000,000 shares at 0.25 cent per share and paying cash outstanding to $30,000 for its interest in the business.

The assets of the business consist of the David Traeger labels, stock, plant and equipment and goodwill, with a value of $2,650,000.

For its 80% interest in the business, Dromana will pay $2,120,000, of which $970,000 will be payable in cash and $1,150,000 by the issue of 2,300,000 shares in Dromana at an issue price of 50 cents. The issue of the shares is subject to shareholder approval, as the number of shares represents more than 15% of Dromana's issued capital.

An initial payment of $200,000 has been made (to be repaid by Dromana taking stock to that value if the transaction does not proceed), and the balance of $800,000 is to be paid as to $300,000 on or before 31 December 2002, as to $250,000 on or before 31 August 2003, and as to $250,000 on or before 28 February 2004.

David Traeger, as part of the arrangement, will enter into a winemaking/viticulture consultancy agreement, and so continue his involvement with the business and the David Traeger label.