Shareholders in loss-making and cash-strapped Gibbston Valley Wines Ltd are being asked to stump up with $2.5 million, or face the prospect of the landmark Central Otago winery being wound up in voluntary liquidation.
Shareholders have already rejected a proposed $2.5 million recapitalisation plan last September.
The vineyards Ardgour and Lanes will not be harvested this season and there have been redundancies.
In a candid letter to shareholders recently, chairman and 60% shareholder Phil Griffith said his family trust had already refinanced the winery last September "to keep the company solvent ... but this cannot continue".
Mr Griffith put $1.42 million in an unsecured loan into 23-year-old Gibbston, while director Mike Stone had earlier put in a $450,000 secured loan, which has since been repaid.
Shareholders contacted by the Otago Daily Times were reluctant to comment on the imminent capital-raising proposal, and Mr Stone is not in the country at present.
One source close to company claimed the larger majority shareholders had repeatedly put cash into the venture while the minority shareholders had not been asked to do so and had been "absent and not participating" in the company's affairs.
"There's a recession on.
One way for the minority shareholders to help is to come up with their own money to help operations," the person said.
Nevada-based millionaire Mr Griffith is also involved in the separate but adjacent $300 million Gibbston Valley Station resort development for which resource consent has been granted and building consents are being sought.
The source believed there was still a "possibility" Mr Griffith would step in again.
His wealth appeared secure enough to cover the debts and Gibbston Valley Wines was complementary to the resort operations, but the source cautioned there were separate companies and board decisions involved in the respective businesses.
Gibbston Valley Wines reported a loss of $1.36 million for the year to September, following a loss of $1.28 million the year before.
Mr Griffith said the company's bank was "pressing for shareholder capital infusions" and loan repayment.
"The value of the company is being eroded due to the trading losses and the valuation of vineyards land in the area has reduced, due to the current sale prices of grapes," Mr Griffith said.
The letter to shareholders, and the annual accounts, obtained by the Otago Daily Times, reveal a floating loan with the ANZ Bank for $3.68 million and its total current liabilities amount to $7.02 million, including the bank's $3.68 million and $1.42 million loan to the Griffith family trust.
Its current assets total $4.8 million, including $4.37 million in wine stocks, and separately it has tax losses of $5.72 million to offset future taxable profits.
Its non-current assets, mostly property, plant and equipment, is valued at $6.8 million.
Mr Griffith said, "The company is looking at all options to restructure the financial position and remain solvent.
"There is, however, no assurance that this [recapitalisation and restructuring] will happen and that further cash may be necessary or liquidation of the company may be the best alternative," Mr Griffith said.
He said the harvest to date was "good" and early indications were that the barrelled pinot noir was of an "outstanding quality".
Wine stocks would be reduced, the $2.5 million recapitalisation would be used to pay debt, and "hopefully" a rebound in sales would return Gibbston to positive cash flow.
Following a second appraisal of assets and valuation by Deloitte, the Gibbston board is asking shareholders to provide $2.5 million, at 5c per share owned, with the situation to be discussed at the company's annual meeting at at Gibbston next Monday.
Deloitte's report noted the Alexandra vineyard grape supply and management lease would be cancelled, costing Gibbston $200,000 plus GST in a cancellation fee.
The Deloitte report said: "The company continues as a going concern.
However, its future viability depends on the continued financial support of the majority shareholders who have provided representation that they intend to provide the required financial support for the foreseeable future."
