TUART RESOURCES LIMITED 2002-07-29 ASX-SIGNAL-GHOMEX - Perth...

TUART RESOURCES LIMITED 2002-07-29 ASX-SIGNAL-G

HOMEX - Perth

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Tuart provides the following information to the market further to its
announcement that it is negotiating a debt facility.

On Friday, 26 July 2002 Tuart obtained formal approval from
financiers which subject to documentation is for a total borrowing of
$4.75 million for Southern Wine Corporation and the Fernvale Unit
Trust.

Drawdown of the first $950,000 was intended to be utilised to
re-finance the existing Commonwealth Bank Secured Mortgage over the
vineyard at Preston Vale owned by the Fernvale Unit Trust.

The balance of the funds will be borrowed upon approval by the unit
holders of the Fernvale Unit Trust. In this regard a meeting will be
convened as soon as practicable to seek that consent.

As previously indicated however a condition of the loan will require
Southern Wine Corporation Ltd to compromise the outstanding tax
liability that arises in respect of the period prior to the
acquisition of control of Southern Wine by Tuart.

On Friday, 26 July 2002, Southern Wine Corporation Ltd resolved to
convene a meeting of the growers of the SWC Managed Investment
Scheme. At this meeting growers will be asked to vote on a range of
proposals namely:

(a) whether the growers individually contribute $1,800 per growers
unit (raising a total of $2 million) to fund the shortfall in
management expenses likely to occur in the current financial year; or

(b) the growers resolve to authorise Southern Wine to borrow the
funds on behalf of the growers secured against the growers interest
in the scheme to meet the ongoing expenses; or

(c) whether the growers vote to terminate the managed investment
scheme.

In the event that no resolution is passed by the growers, South Wine
Corporation has resolved to initiate procedures underthe
Corporations Act to terminate the managed investment scheme.
Termination of the scheme will not affect the ownership of the land
upon which the vineyard is situated. Southern Wine will continue to
own approximately 60% of the units in the Fernvale Unit Trust with
the balance being owned by growers.

A copy of Southern Wine Corporation's letter to each of the growers
is annexed to each announcement.

Further, since the date of the last announcement the Australian
Securities and Investments Commission had indicated that it holds
concerns as to the compliance by Southern Wine Corporation Ltd with
its security dealers' licence and unless Tuart addresses those
concerns will apply for the appointment of a provisional liquidator.
An application by ASIC seeking an order in those terms has been
lodged by ASIC in the Supreme Court.

To resolve ASIC's concerns and to formalise a compromise with the ATO
the directors of Tuart required the directors of Southern Wine
Corporation Ltd to take steps today to appoint Mr Mark Reilly and Mr
Glen Featherby as joint and several voluntary administrators of
Southern Wine.

From initial discussions with the administrators of Southern Wine
Tuart believes it is still the intention of the administrators to
proceed with the meeting of growers described above.

During this period of time:

1 Tuart will take steps to attempt to finalise the leading. We are
uncertain as to the impact the appointment of an administrator will
have on the finance approval.

2 The lending proposal will form the basis for a Deed of Company
Arrangement to be put to creditors on the basis that upon
compromising of various debts the company's administration can be
terminated and returned to the control of Tuart.

3 In the meantime if growers vote to provide additional equity funds
to finance the shortfall in management expenses then the financial
position of Southern Wine will be improved considerably.
Alternatively, if the growers vote to terminate the scheme then the
ownership structure of the vineyard will be simplified and this will
enable Tuart to more readily deal with its beneficial interest in the
Vineyard.

In summary, the board of Tuart believes that the step of placing
Southern Wine in administration is a necessary step to resolve the
historic debts inherited by the company when it took over the Nelson
Ridge Croup.

Tuart hopes that the financepackage it secured can be maintained.

The process of administration should ensure that the funds raised
from lenders are applied for the current economic interests of the
growers and Southern Wine (as a subsidiary of Tuart) and are not
utilised in paying out historic debts.

M Bennett
CHAIRMAN

MORE TO FOLLOW

TUART RESOURCES LIMITED 2002-07-29 ASX-SIGNAL-G

HOMEX - Perth

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CHAIRMAN'S LETTER

MEETING OF MEMBERS OF SWC MIS

I write to you in my capacity as chairman of Southern Wine
Corporation Ltd, the Responsible Entity of the SWC MIS and enclose a
Notice of Meeting in relation to a meeting of scheme members to be
held on Tuesday, 20 August 2002.

The SWC MIS is currently entering its fourth year. To date the
Preston Vale vineyard property has been established to world-class
standards and is in excellent operational condition. April 2002
marked the completion of the first significant growing year with over
1,000 tonnes of grapes grown.

Although the 2002 growing season produced a harvest yield consistent
with prospectus forecasts, the receipts for grape sales were
significantly affected by the major over supply conditions in
Australia for red grapes. The white grape varieties were readily sold
for good prices but the whites only represent approximately 20%-30%
of the total crop. The Responsible Entity managed to secure sales for
a significant proportion of its red grapes, but unfortunately the
failure of one buyer to take delivery of a significant quantity of
grapes meant a large quantity of grapes could not be harvested. In
addition, prices for those red grapes sold were lower than prices for
comparable produce in recent years.

The downturn in the red grape market is a serious issue for the
Scheme. The Constitution of the Scheme provides that Management Fees
for Year 4 onwards are to be in the first instance recouped by the
Responsible Entity from grape sales. There is however a shortfall
between grape sales and Management Fees of approximately $2 million
for the 2002/2003 financial year, representing $1,800 per Licensed
Area.

The shortfall has been exacerbated by the fact that a small but
significant number of members of the SWC MIS have defaulted in the
payment of prior year Licence and Management Fees and repayment of
loans taken out to finance their investment in the Project. These
defaults have meant that the Responsible Entity has been left to fund
the prior year shortfall in receipts from its own resources.

Under the terms of the Licence and Management Agreement (forming part
of the Scheme Constitution), where a shortfall occurs the Responsible
Entity may request members to make additional contributions, subject
to approval at a meeting of members.

If the resolution to require an additional contribution is passed all
members are bound to contribute and will be invoiced accordingly. In
the event that individual members do not pay their contribution, the
Responsible Entity has a number of choices available including
terminating the defaulting member's interest it) the SWC MIS.

If members do not wish to make additional contributions to fund
ongoing management of the vineyard they have essentially two choices.

Firstly, they can resolve for the SWC MIS to be wound up. In
accordance with the Constitution, winding up would involve the
appointment of a registered company liquidator essentially to sell
the assets of the scheme, pay off any debts, and return the surplus
(if any) to members. The principal asset of the SWC MIS is the lease
of the Preston Vale vineyard from the Fernvale Unit Trust MIS, which
lease runs to 30 June 2019. The principal liability of the SWC MIS is
the money currently owed to the Responsible Entity for unpaid
Management Fees, which the Responsible Entity has a right to recoup
from any sale proceeds of the assets of the SWC MIS. In the event of
winding up of the SWC MIS, members will still retain their membership
of the Fernvale Unit Trust MIS, which owns the land on which the
Preston Vale vineyard is planted.

The other option available is resolve to authorise the Responsible
Entity to seek to borrow funds secured against the future Project
Income, failing which the Scheme will be wound up. The Responsible
Entity has been for some time seeking to borrow funds in this manner
and has received at least two proposals, which have progressed to an
advanced stage. Whilst the Responsible Entity is hopeful that one of
these proposals will come to fruition by the end of September 2002
given the current market volatilities this is by no means guaranteed.
The borrowing of funds will almost certainly also require the
Fernvaie unit Trust to agree to a mortgage of the vineyard land. To
this end, once any borrowing proposal is finalised, the Responsible
Entity will convene a meeting of the members of the Fernvale Unit
Trust to consent to this security. Full details of any proposal will
be included in any Notice of Meeting sent to members of the Fernvale
Unit Trust.

It is important to note that ifmembers resolve to pay the additional
Management Fees, this does not preclude the Responsible Entity also
borrowing additional funds.

In addition to the circumstances outlined above (namely the default
in payment of management fees by a small but significant number of
growers, the need for the Responsible Entity to fund the operations
of the scheme from its own funds and the reduced receipt from the
sale of grapes), the Responsible Entity has received a significant
assessment for tax which raises a real issue as to the solvency of
the Responsible Entity.

For that reason the directors of the Responsible Entity intend to
appoint a voluntary administrator (Mr John Carrello of PKF Chartered
Accountants) to administer the affairs of the Responsible Entity
pending the holding of the Meeting the subject of the enclosed
Notice.

During the period of voluntary administration the Responsible Entity
will also be seeking to compromise its principal debts and
particularly the assessment issue by the Australian Tax Office.

In summary, members of the SWC MIS are essentially being given the
choice to:

1. contribute more funds to enable the Scheme to continue operating
for another year and therefore protecting the investment they have
already made in the Scheme;

2. elect for the Scheme to be wound up with the possibility (but
again without any guarantee) that members will receive a dividend in
the winding up; or

3. rely solelyon the possibility of the Responsible Entity to borrow
funds to avoid the winding up of the Scheme.


M Bennett
CHAIRMAN

TUART RESOURCES LIMITED 2002-07-29 ASX-SIGNAL-G

HOMEX - Perth

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NOTICE OF MEETING OF SCHEME MEMBERS

Notice is hereby given that a Meeting of the members of the SWC MIS
will be held at 1st Floor, BGC Centre, 28 The Esplanade, Perth,
Western Australia on Tuesday, 20 August 2002 at 10.00am (WST).

AGENDA

The meeting is to consider and, if thought fit, to pass one only of
the following three resolutions for the purpose of Clause 12.6 of the
Licence and Management Agreement entered into by each member of the
SWC MIS and forming part of the Constitution of the SWC MIS;

1. That the members be required to make additional contributions
pursuant to Clause 12.1(e) of the Licence and Management Agreement in
the amount of $1,800 per Licensed Area, to make up the shortfall in
Management Fees for the 2002/2003 financial year.

OR

2. That the SWC MIS bewound up in accordance with its Constitution.

OR

3. That the Responsible Entity seek to borrow funds secured against
the future Project Income, or if the Responsible Entity is unable to
borrow such funds on or before 30 September 2002 on terms considered
by the Responsible Entity to be reasonable in the interests of the
members the SWC MIS be wound up in accordance with its Constitution.

R Kestel
COMPANY SECRETARY OF THE RESPONSIBLE ENTITY