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Investors Endorse Formation Of New Wine Co.

Farmers Mutual Group

INVESTORS ENDORSE FORMATION OF NEW WINE COMPANY

The new $12 million wine company proposed for the Awatere Valley today cleared its first hurdle by gaining approval from the partners in the two existing vineyard partnerships to form the new company, The Crossings (Marlborough) Limited.

Today’s extraordinary general meeting of Medway River and Brackenfield Estate Vineyard partners ratified earlier resolutions authorising the sale of the two established vineyards to The Crossings (Marlborough) Limited, in return for shares in the new company. The partners have agreed to exchange their current holding in the vineyard partnerships for discounted ordinary shares, convertible preference shares or a combination of the two in the new company.

“The partners have taken the opportunity to consolidate their current investment into a new venture at the value-added end of the wine industry,” Mr Michael Millar, chief executive of Farmers’ Mutual Group, said today.

“The strength of the support demonstrated by the partners is consistent with the strong interest, from this country and abroad, in investments in the New Zealand wine sector.

“By achieving the critical mass necessary (over 500,000 litres as a Category II* wine producer) The Crossings will be able to export almost all of its entire production.

“With New Zealand receiving international acclaim for its wine and export sales exceeding projections, this new venture will be able to build on an increasing demand for quality ‘new world’ wines. We have identified the United States, Canada, Europe and Japan as key target markets for the premium wines that will be produced by the new company.”

The new company will comprise three vineyards: the Medway Vineyard that was planted in 1996; Brackenfield Vineyard planted in 1998; and a new 'greenfield' vineyard, The Crossings. In total, the three vineyards will amount to 345 acres.

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By 2005 when the third vineyard comes on-stream, the company expects to produce around 630,000 litres of premium wine which, with the possible exception of some direct sales to shareholders, will be exported.

To this end, the company has an exclusive agreement with leading Californian wine specialists, International Wine Associates, who will develop marketing and distribution arrangements for the company’s wine internationally.

International Wine Associates view New Zealand as a relatively cost-efficient wine producer when compared to other countries and are encouraged by the fact that New Zealand has the highest average price per litre of wine exported of all ‘new world’ countries.

“The new company realises the original vision for the Medway and Brackenfield vineyards to establish a winery to develop promote and sell premium wines to overseas markets,” according to Mr Millar.

The investment promoters are Farmers’ Mutual Investment Services Limited, a division of the specialist rural financial services company Farmers’ Mutual Group, and Investment Services Limited, who will act as investment manager.

*Note: The Wine Institute of New Zealand – Category II wine producers have annual grape wine sales of between 200,000 litres and 2,000,000 litres.


ENDS

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