Investors thirst for wine-related investments has lead Delegat's Wine Estate to seek $18 million from the public for its Oyster Bay Marlborough vineyard expansion.
The offer has two sweeteners: a 30 per cent discount on Oyster Bay wine purchases and preferential treatment to subscribe for shares should the Delegat's Group seek a full market listing.
Oyster Bay shares are being offered in minimum parcels of 5000, payable in two instalments: 100c a share on application and 100c a share on June 30 next year. The prospectus puts a net asset value on the share of 104c for every 100c invested.
The company isn't expecting to make its first profit until 2003. The prospectus says in that year Oyster Bay should have revenues of $1.9 million and a profit of $147,163. From then on profits are expected to steadily rise to $1.3 million in 2007.
A nominal pre-tax dividend yield of 4.5 per cent is projected in 2003, increasing each year until 2007 when it reaches 11.2 per cent.
Oyster Bay chairman Bill Falconer says the 30 per cent discount offer on Delegat's wines is equivalent to 7 cents per share (based on six cases of $17 bottles of wines).
Delegat's managing director Jim Delegat says the money raised will be used to buy two adjoining properties, totalling 301ha, in Marlborough's Wairau Valley region. One of them, the 91ha Gifford's Creek property, is owned by Delegat's and is already planted, while the 210ha Airfields property will be planted this winter.
The Oyster Bay offer is an investment in grape growing only. The company will have a 20 year contract to sell its grapes to Delegat's which will make and sell the wine.
More than half (56 per cent) of the vineyard will be planted in Sauvignon Blanc, 36 per cent will be Chardonnay and 9 per cent Pinot Noir.
Delegat's will be a cornerstone shareholder in Oyster Bay, taking at least 20 per cent of the company for a minimum of five years. The closing date for the offer, handled by broker Craig & Co, is July 7.
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