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Delegat¡¦s To Make $35 Million Capital Notes Offer

Delegat¡¦s To Make $35 Million Capital Notes Offer

Leading New Zealand winemaker Delegat¡¦s Group Limited is seeking to raise $35 million through a fully underwritten issue of unsecured, subordinated Capital Notes. The offer is part of a strategic funding programme which also includes plans for an equity issue next year.

The Notes will be for a term of just over three years maturing on 15 November 2007 and will carry an interest rate of 9.75% per annum.

The Offer opens on 28 June 2004 and will close on or before 23 July 2004. There is no provision to accept oversubscriptions. The minimum application for Capital Notes is $5,000 and thereafter in multiples of $1,000.

The Lead Manager and Underwriter is Westpac Institutional Bank. The Co-Lead Manager and Organising Participant is ABN AMRO Craigs Limited.

Prior to 15 November 2007 (¡§Maturity Date¡¨), Delegat¡¦s can elect to either: offer Noteholders an opportunity to renew all of their Capital Notes from the Maturity Date on new terms and conditions; redeem the Notes from the Maturity Date for cash; or convert the Notes into ordinary shares in Delegat¡¦s at the relevant conversion rate.

The Capital Notes Offer is part of a funding programme designed to fund the growth of Delegat¡¦s and strengthen its long term financial position. The funding programme includes this Capital Notes Offer and an equity raising - the latter to be undertaken in the second half of the 2005 calendar year.

The proceeds of this issue will be applied to meeting the costs of the Offer and to repay bank indebtedness. Repayment will, subject to satisfaction of conditions, release pre-arranged project funding for the staged construction of a winery in Marlborough and preliminary expenses associated with a winery in Hawke¡¦s Bay plus a working capital facility to support Delegat¡¦s Group¡¦s growth and expanded activities.

This Offer is the first time the public has had an opportunity to invest directly in Delegat¡¦s Group and provides investors with the opportunity to earn an attractive rate of interest through to November 2007.

¡§International expansion underpins Delegat¡¦s strategic plan¡¨, Managing Director Jim Delegat says.

¡§Our strategy is to lead New Zealand wine category growth and establish Oyster Bay„µ as one of the world¡¦s great Super Premium wine brands. Strong brand marketing, Super Premium positioning, a focused sales and distribution network, and an assured quality grape supply are the foundations of Delegat¡¦s plans to grow sales in international wine markets.¡¨

The operating revenues of the Group have grown from just under $13 million dollars in the year to 30 June 1999, to $22.3 million for the year to 30 June 2003. Over the same period net profit before tax has grown from $1.5 million in 1999 to $2.8 million in 2003.

The prospectus and investment statement for the Capital Notes Offer was registered on 21 June 2004 and forecasts a net profit before tax for the current financial year ending 30 June 2004 of $382,000 after charging issue costs of $3.4 million on revenues of $31.6 million. For the financial year ending 2005, the projection is for a net profit before tax of $7.5 million on revenues of $60.4 million. Exports are projected to grow to 84% of total revenues for the year ending 30 June 2005.

The 2005 projection is based on 11,286 tonnes of grapes being harvested, a 54 per cent increase on this year¡¦s 7,305 tonnes. It is also based on the value of the New Zealand dollar being maintained around current levels to the United States dollar, the British pound and Australian dollar; and no significant changes to the tax or regulatory regimes in which Delegat¡¦s operates.

Delegat¡¦s super premium brand Oyster Bay„µ is the number 2 New Zealand Chardonnay and Sauvignon Blanc in United Kingdom supermarkets and commands a price margin over other leading NZ brands.

Oyster Bay„µ is the leading New Zealand Sauvignon Blanc and Chardonnay brand leader in the retail trade in Canada. The brand is also rapidly gaining market share in Australia and is being established in the United States.

¡§We see Oyster Bay„µ becoming one of the world¡¦s super premium brands which consumers know they can trust to deliver elegant, flavourful wines,¡¨ Jim Delegat says.

Branding, distribution, wine quality and vineyards are the four strategic investments for success made by Delegat¡¦s in the last 30 years to grow the family business into New Zealand¡¦s fourth largest wine maker.

Delegat¡¦s Group is owned by Jim and his sister Rosemari who took over the family business in 1973 on the death of their father Nikola.

Robert Wilton, Senior Lecturer and past Head of Department, Department of Accounting and Finance within the School of Business and Economics at the University of Auckland, is the Company¡¦s non-executive Chairman. Mr Wilton is a member of the Institute of Chartered Accountants of New Zealand and the Institute of Directors. Mr Wilton is a past Chairman of the New Zealand Venture Capital Association.

The Group also owns 32.58% per cent of Oyster Bay Marlborough Vineyards Limited which has an exclusive contract to supply Delegat¡¦s with grapes.

ENDS

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