Super Fund splashes out on Yealands vineyards
Wimemaker says $34 million deal will help get rid of debt
Yealands, the Marlborough winemaker owned by the region’s electricity network, has sold a chunk of its vineyards to the Super Fund to pay down debt.
The deal, understood to be for $34 million, sees the Super Fund acquire four vineyards which have a total 187 hectares of planted grapes, mostly sauvignon blanc and pinot noir.
Earlier this week Marlborough Lines, which paid more than $100m acquiring Yealands, confirmed it was not paying a dividend to its owner, the Marlborough Electric Power Trust.
Its chairman, Blenheim lawyer David Dew, maintained that the investment was still a good one.
MEPT has also confirmed that it opted not to pay a distribution to its consumers, electricity users in the region, several months ago.
Marlborough Lines’ annual report also confirmed the lines company had extended a $15m loan to Yealands, reportedly in October 2019, paying off part of the debt owed to ASB. At the time of the annual report, Yealands owed ASB $115m.
The deal includes a long-term supply arrangement for Yealands to buy grapes from the Super Fund, the terms of which were not disclosed.
In a statement, Yealands chief executive Tiffani Graydon said the capital would be used to “reinvent and grow” the business, but acknowledged the need to reduce debt.
“This land sale is about supporting our business strategy for accelerated growth, while achieving financial sustainability for the future, including debt reduction.”
As well as “brand growth” in export markets, Graydon said the capital would be used for further vineyard development.
The sale marks something of a change in strategy for Yealands, which had continued to acquire land since Marlborough Lines began buying it in 2015. As recently as the 2019 annual report, Marlborough Lines said acquiring land improve the economies of scale of Yealands.
While Marlborough Lines had blamed Covid-19 for a downturn in Yealands’ profitability, Graydon said demand in Europe and the UK was “incredibly strong”.
NZ Super, a $50 billion fund established to help cover New Zealand’s future pension liabilities, said the vineyards were “a valuable addition to our growing portfolio of rural land across New Zealand, which we see as providing diversification benefits to the fund and will allow us more access to the successful New Zealand viticulture sector”.
The properties will be overseen by FarmRight, the manager of the NZ Super Fund’s rural investment portfolio.
When Marlborough Lines purchased its initial 80 per cent stake in Yealands for $89m in 2015, it promoted the deal as a means of increasing dividends to its owners.
The trustees of the MEPT are facing a civil action led by local business adviser David Taylor. In September MEPT and Marlborough Lines went to court to prevent Taylor from distributing meeting minutes which it failed to properly redact.