AUSTRALIA: E&T agrees to sell Mildura winery

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Embattled West Australian winemaker Evans & Tate is to sell off its Mildura winery to UK beverage group Neqtar.

In a statement released to the Australian Stock Exchange today (14 March), E&T said that it had agreed to sell the winery for A$22m (US$16.13m) plus the granting of options over 5.9% of the pre-listing capital of Neqtar.

The sale is subject to a number of conditions including due diligence and Neqtar listing on the Alternative Investment Market (AIM) of the London Stock Exchange, which is expected to be in the first half of 2006.

Neqtar is the holding company of HwCg ltd, with which E&T also said it had executed a new distribution agreement for the UK market.

E&T said it intended to use the funds raised from the sale to repay bank debt.

"Evans & Tate has committed to reduce its debt and the sale of the Mildura winery will allow us to reduce debt significantly," CEO Martin Jonhson said.

"Following a strategic review of Evans & Tate's UK business in late 2005, the board determined it needed to form a strategic alliance with a significant partner. We believe HwCg will be an excellent partner for us.

"The transaction is attractive to Evans & Tate because not only will we retain an interest in the future performance of the Mildura winery, we will also retain its Salisbury and Barramundi brands and contract their production to Neqtar. In addition, we will gain an interest in Neqtar's diversified portfolio of assets through our equity interest in Neqtar."

Of the new distribution deal, Johnson said E&T's recent strategic review had identified the need for the company to focus on the higher margin premium wine segment.

"We believe HwCg is the right distributor to attack this market," he said.

As a result of the distribution deal, E&T said it would be closing its UK office, which will result in the phasing out of four positions over 2006. It would also lead to further cost savings, the company said.

Sectors: Wine

Companies: Alcohol In Moderation

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