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in the west today

  1. johnnyr

    1,217 Posts.

    Wine promoter buys time

    By John Phaceas

    WINE-SCHEME promoter Southern Wine Corporation has been placed in voluntary administration to stave off a liquidation action by the Australian Securities & Investments Commission.

    The move complicates efforts to finalise a crucial $4.75 million rescue package negotiated last Friday and needed to refinance the core vineyard assets of SWC and its ailing parent, listed explorer and vineyard manager Tuart Resources.

    In the WA Supreme Court yesterday, ASIC sought orders to wind up SWC and appoint a provisional liquidator.

    It alleged in a statement the company, which manages the big Preston Vale vineyard at Donnybrook, was insolvent and unable to return to solvency.

    "ASIC will now consider whether the company's (security) dealer licence should be revoked or suspended," the corporate watchdog said.

    But the case was adjourned when SWC pre-empted ASIC's efforts by appointing Mark Reilly of insolvency specialists Featherby Reilly as administrator of the group.

    Mr Reilly yesterday said unsecured creditors were owed more than $6 million, including at least $2 million owed to the Australian Taxation Office.

    Martin Bennett, who is a director of SWC and chairman of Tuart, said Tuart was owed about $3 million.

    Tuart assumed control of SWC in its disastrous takeover of the Nelson Ridge wine group in late 2000, a deal which left Tuart teetering when the nation's growing wine glut sent grape prices plummeting, and doubts emerged about the validity of indemnities for debts incurred by Nelson Ridge prior to the takeover.

    Another Nelson Ridge subsidiary, Diamond Ridge Management, was subsequently placed in administration in February, after Tuart refused to provide further financial support or pay a $2.6 million tax bill owed by Diamond Ridge.

    Mr Bennett said yesterday ASIC's efforts effectively replicated Tuart's own plans to resolve SWC's financial problems and refinance the Preston Vale operation.

    "For ASIC it's really just a timing issue, and they want us to do things in a particular way," he said.

    "We had always intended to (negotiate) a compromise with the ATO."

    ASIC's actions come at a sensitive time for Tuart, which on Friday had obtained formal approval from unnamed financiers in Melbourne to borrow $4.75 million to refinance Preston Vale and was finalising plans to collapse the associated investment scheme.

    The offer was also conditional on SWC resolving its dispute with the ATO, and approval from scheme investors.

    SWC had planned to call a meeting of scheme investors for August 20, at which the offer would be discussed and investors would be asked to collapse the scheme or pay $2 million in extra management fees needed to keep the vineyard operating due to a shortfall from grape sale receipts.

    Mr Bennett said the meeting would still go ahead, and that Tuart's financiers had indicated the offer of funding would be unaffected by SWC's administration.

    In the meantime, a first creditors meeting has been scheduled for Tuesday.

    Tuart shares last traded at just 0.3¢ when the stock was suspended last Thursday.

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