Dividends paid in wine: former Torbreck owner Dave Powell gets go ahead for $10m cap raise

Dave Powell wants to raise $10m for his super premium, yet struggling, Barossa Valley winery, after ASIC’s concerns with the process were assuaged.

Winemaker Dave Powell is seeking $10m to bolster growth at his Neldner Road winery.

It’s the capital raise that will give shareholders the right to one $200 bottle of wine per year, but not the right to vote in meetings, see any financial documents, or even be paid dividends.

The corporate regulator this week paved the way for Dave Powell to raise $10m for his Neldner Road operation having earlier put a temporary stop to the Barossa Valley wine identity’s plans.

“Each share parcel will attract a dividend of one bottle of premium shiraz valued at $200 annually, along with a 20 per cent reduction on the price of any future purchases as a shareholder,’’ the offer documents read.

Shareholders will not have the right to receive notice of the company’s general meetings, vote at meetings, except in special circumstances, inspect or receive any financial documents or be paid dividends, they note.

Powell has been a larger-than-life personality in wine circles since founding Torbreck in the Barossa in 1994. Most famously – in the industry, at least – he fell out with Torbreck owner Pete Kight, a billionaire tech entrepreneur, over the winery.

Kight had acquired Torbreck from billionaire Hungry Jack’s chairman Jack Cowin in 2008, who turned around the business after administration in 2002.

Powell parted ways with Torbreck in 2013 after a series of missteps, including, as Kight alleged at the time, profligate spending such as running up a $92,000 tab at a Danish strip club, $15,000 for lunch at Sydney fine diner Tetsuya’s and $25,000 for three days at a Hong Kong hotel.

Dave Powell wants to raise $10m for his Neldner Road operation.

According to information circulated by Neldner Road, the winery’s liabilities outweigh its assets by $517,463 after two years of losses, requiring the inclusion of a warning about its “going concern” statement in the offer.

The funds raised will be used – in the first instance – to recover from the effects of the Covid-19 pandemic and for working capital, the document reads.

“Depending on the amount of funds raised, the fundraising may also facilitate the purchase of the vineyards already utilised by the company … further invest in the expansion of production and sales of wine to international markets, and build a cellar door at the Neldner Road property,’’ Powell writes in the document.

“If the company raises the maximum of $10m, it plans to build a winery on the Neldner Road property along with boutique accommodation.’’

The company, the new documents lodged with the Australian Securities and Investments Commission note, has wholesale wine stock on hand worth $13m, which “it can sell in bulk to alleviate the going concern risk’’. “Further investment in the company (from the funds raised) will allow the company to bottle bulk stock, making it more likely to receive retail value of $25m,” it continues.

Documents lodged with the regulator show it made a $224,111 loss for the 12 months ending June 30 on revenues of $2.2m.

Neldner is aiming to offer 5000 shares at $2000 apiece.

The shares would convert from A Class shares into ordinary shares if a “liquidity event’’ occurs, including if more than 80 per cent of the company was sold for more than $10m, or the company listed on the ASX.

Powell currently owns all the shares in the company, and his stake would fall to 50 per cent should the whole $10m be raised.

The offer is not underwritten and does not have a minimum raise amount. ASIC on October 24 placed an interim stop order on the offer, but said on Wednesday this had been lifted. The offer is open until October 17, 2023.

The regulator had concerns about “deficiencies in the issuers’ target market determinations’’ however, the stop order was lifted after Neldner proposed amendments to its offer document.

After falling out with Kight – Powell claimed the businessman was destroying his family legacy, while Kight said Powell had “lost Torbreck in his own divorce” – Powell has reinvented himself with Neldner Road.

The winery was known as Powell & Son, but changed names after Powell parted ways with his son Callum over winemaking differences. The winery last year attempted to sell its entire vintage using non-fungible tokens, with 100 barrels of single-vineyard shiraz listed for sale on the NFT marketplace OpenSea.

That effort failed, however, with no sales being made.

Neither Powell nor Neldner Road responded to requests for comment on Wednesday.