CASH-STRAPPED explorer and vineyard manager Tuart Resources has aborted plans to raise up to $10 million needed to rebuild the group due to the steady collapse of its share price over the past two months.
In April, Tuart shareholders approved plans to issue up to 675 million new shares at 1.5¢ each to erase debts and recapitalise the vineyard business, but with the stock having since fallen to just 0.4¢, Tuart yesterday conceded there was little point in proceeding.
"The company has independently been in discussion with a number of parties who have expressed interest in injecting further funds pursuant to the capital raising approved at the general meeting," Tuart said. "Unfortunately, the company's share price has for some time been substantially below the issue price approved . . . and as such (Tuart) does not anticipate it will be in a position to raise substantial further funds at that price."
Nonetheless, Tuart's position remains considerably stronger than in April, having since converted more than $2 million of current debt to new equity at 1.5¢, and raised an additional $650,000 in working capital.
It has also negotiated the sale of all grapes harvested this year from its big Diamond Ridge and Preston Vale vineyards near Donnybrook, and signed a deal to supply the Melbourne-based NexBanc group with 2.3 million bottles of "clean-skin" wine worth $10.5 million. The wine is to be made under contract by Franklin River producer Alkoomi Wines using grapes from the 2003 harvest at Diamond Ridge and Preston Vale.
Importantly, Tuart yesterday said NexBanc, which plans to establish its own label for Asia, had offered to loan the group "substantial funds" to meet Preston Vale-related expenses which could be repaid from the proceeds of its 2003 wine sale agreement.
Tuart also confirmed yesterday that Diamond Ridge had been put on the market in a bid to recoup $2.2 million owed to secured creditors of the 280-hectare property, which includes 64ha under vine.
Commonwealth Bank is the main secured creditor with a mortgage of $1.4 million, while Yehuda Nominees holds an $800,000 mortgage on the property.
The land itself is owned by Western Australian Wine Corporation, a subsidiary of the Nelson Ridge wine group acquired by Tuart in a $37.5 million scrip deal early last year. The acquisition has been the main cause of Tuart's financial woes.
Tuart, which put fellow Nelson Ridge subsidiary Diamond Ridge Management into administration last year, yesterday repeated that it was not responsible for WAWC's debts as they were incurred prior to the Nelson Ridge acquisition.
CBA this week appointed Perth firm Ashton Read as receiver in relation to the Diamond Ridge vineyard debt.
