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Delegat's to bid for rest of Oyster Bay

Contributor:
Fuseworks Media
Fuseworks Media

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Wellington, Oct 18 NZPA - Delegat's Wine Estate Ltd is bidding to buy all of the shares it does not already own in Oyster Bay Marlborough Vineyards Ltd after receiving an approach from the independent directors of financially troubled Oyster Bay.

Delegat's currently owns 54.9 percent of Oyster Bay. It has given notice of a bid to offer $1.80 a share cash or one Delegat's Group Ltd share for every Oyster Bay share. Oyster Bay's shares were untraded today but last traded at $1.60 each.

Oyster Bay directors are not yet making any recommendation to shareholders yet. The formal offer is expected to be made on November 2. A committee of independent directors comprising Sandy Maier, Ruth Richardson and Mark Peters has appointed Grant Samuel and Associates to prepare an independent adviser's report and First NZ Capital to provide commercial advice.

In April, Oyster Bay said it may fail to meet its banking covenants and a waiver of these covenants for the 2010 financial year was subsequently granted by its bank. Oyster Bay went on to report a loss after tax from operations of $841,000 in the year to June 30, and a net loss of $13.82m after tax and non-cash adjustments.

The company commissioned First NZ Capital to advise on its capital structure and after receiving a report the indepedent directors approached Delegat's to present the key findings. The committee of independent directors will disclose the primary outcomes of this report in the target company statement to shareholders.

"The independent committee believes today's offer announcement by Delegat's is a response to its approach, but it has not provided endorsement of the offer to any party and in relation to the offer. The formal recommendation of the independent committee will be contained in the target company statement," they said.

Delegat's said it undertook a strategic review in response to the approach by the independent directors of Oyster Bay who regarded a takeover as the best means of addressing Oyster Bay's financial situation.

Delegat's said it considered Oyster Bay's importance to Delegat's as supplier of premium quality grapes in its review.

Delegat's considers that grape prices are unlikely to improve significantly in the short-term so any improvement in Oyster Bay's financial situation is unlikely.

New Zealand's wine industry has been struggling due to an oversupply of wine which coincided with the global recession and resulted in a number of receiverships among growers and vintners.

Delegat's managing director Jim Delegat said at the time of his company's annual profit report that the group's Oyster Bay brand was established as a leading super premium wine brand in New Zealand, Australia, the United Kingdom and Ireland.

The Oyster Bay brand is gaining momentum in the important growth markets of the United States and Canada, he said.

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