A Western Australia vineyard project that was sold heavily through financial planners has gone into administration.
A Western Australia vineyard project that was sold heavily through financial planners has gone into administration.
The Karri Oak Vineyard and the trustee Sandgate Corporation were put into voluntary administration on August 30, with debts of about $15 million.
The administrator, Bryan Hughes of Perth-based accountants Norgard Clohessy, told Money Management the move had been due to a number of difficulties faced by Sandgate.
“Administration was the only way of solving these difficulties which stemmed from the failure of Grubb Finance which had $2.85 million invested in Karri Oak and there is little prospect of seeing that money,” he says.
The land at the Mount Barker vineyard was mortgaged to Grubb Finance, which had some 300 mortgagees providing the funds for Sandgate to buy the property.
Karri Oak Vineyard has had two fund-raising exercises and not all the Mount Barker vineyard has been developed or planted.
Two prospectuses have been issued for Karri Oak. The first project planned to raise $8 million to plant 130 hectares of vines. Hughes says the vineyard has been well-established and maintained and a valuation of $9.4 million has been put on the property. There is also $4.5 million of funds with the custodian at present. When that is released it will restore liquidity to the project.
The second project, which had a prospectus dated April this year, planned to raise $12 million to plant a further 192 hectares. This planting was to be on both the existing vineyards and a new property a few kilometres away.
Hughes says all the funds raised under the second prospectus are with the custodian and the money is safe.
He is confident the problems at Karri Oak can be resolved as the vineyard is a viable trading proposition. The people physically managing the project, Ted Holland and Ted Avery, are respected viticulturists with many year’s experience in the wine industry.
Hughes says he will probably now sell off the peripheral vineyards and concentrate on the main vineyard at Mount Barker.
“We are trying to be positive with this project as the vineyard is in good shape. If we can restore solvency to the projects, they can continue,” he says.
Sandgate was also involved with a sandalwood project in the Ord River area of Western Australia. The management of this project has been taken over by Troika Securities and is not affect by the administration of Sandgate.
