Bookpurnong Rd Salena Estate’s huge glut, debts revealed as white knight sought

The huge wine glut and debts amassed by failed producer Salena Estate have been revealed, as administrators begin their search for a white knight.

Salena Estate’s business and vineyards will be put on the market once the current vintage is completed.

Administrators are looking to sell down a five million litre glut of bulk wine held by embattled Riverland producer Salena Estate ahead of a public sale campaign for the business.

Westpac is the main-secured creditor, owed close to $20m following the company’s collapse last month, while unsecured creditors, including close to 20 local growers, have been left $4m out of pocket.

Minutes from the first creditors’ meeting held earlier this month reveal about five million litres of bulk wine was left unsold at the winery at the time administrators were called in.

The stock was valued earlier this month, but administrators Tim Mableson and Ryan Eagle from KPMG declined to comment on the valuation.

Creditors were told at the meeting that a formal sale process for the business and its assets, including two vineyard properties in the Riverland, would commence following completion of the current vintage, in early to mid-April.

It is hoped a potential breakthrough in the long-running trade dispute with China could fuel renewed interest in the assets following a failed sale campaign last year.

A decision on whether China will lift the tariffs it imposed on Australian wine in 2021 is expected within days, after the Chinese Ministry of Commerce last week released a draft recommendation to remove the tariffs.

Salena Estate on Bookpurnong Rd. Picture: Supplied

China’s foreign minister Wang Yi is currently in Australia, with trade tensions between the two countries expected to be a major topic of discussion.

Mr Mableson said he was expecting “strong interest” in the Salena Estate sale.

“The potential relaxation of the tariffs with China is expected to generate positive sentiment in the industry and in winery and vineyard assets of the type being offered for sale in the Salena Estate Wines administration,” he said.

Salena Estate directors, Bob and Sylvia Franchitto, are also considering a deed of company arrangement proposal, which would be considered alongside the business sale process.

Westpac is providing the funding needed for administrators to continue to trade the business through the current vintage and undertake a sale campaign.

Salena Estate, established by the Franchitto family in 1998, produces around 10,000 tonnes of predominantly red wine annually – making it one of the country’s largest organic wineries – selling the majority into export markets across Asia, the US and Europe.

China was previously a major customer before the tariffs were imposed.

Administrators have taken control of most of the Salena group entities, including the main trading company Salena Estate Wines, as well as related companies that run the vineyards and manage the group’s bulk wine exports.

Another related company, B & S Franchitto, owns the group’s two properties in Bookpurnong and Lyrup, and is currently in the hands of receivers Andrew Heard and Anthony Phillips from Heard Phillips Lieberenz.

According to the minutes of the creditors’ meeting, the group’s assets will be marketed to potential buyers as a whole, with buyers given the option of bidding for individual assets separately “if that resulted in a better outcome for stakeholders”.

Colliers Agribusiness was appointed to sell the business and properties in April last year, but a buyer could not be found.

The company’s 191.5ha of vineyards at the main site at Bookpurnong, between Loxton and Berri, and at a second property at Lyrup, just outside Berri, include Shiraz, Cabernet Sauvignon, Sangiovese, Petit Verdot and Chardonnay plantings, with 121.4ha certified organic.

Salena Estate sources fruit from its own vineyards as well as from growers in the Riverland region. Close to 20 growers are owed around $450,000.

Originally published as Bookpurnong Rd Salena Estate’s huge glut, debts revealed as white knight sought