While Foster’s, the owner of Beringer Blass, has apparently established a group to perform a due diligence on Southcorp, which is currently valued around A$2.5 billion, Allied Domecq, the world’s second-largest liquor company reckons it might make a move on some of its key brands should it be broken up. Allied Domecq has recently increased its stake in Peter Lehmann Wines to a fence-sitting 14.5% level, causing the company’s share price to increase by almost 12% to $A3.20. Southcorp’s debt rating has recently been hammered by ratings agency Standard & Poor’s, which has taken the pessimistic view that the company will take several years to rebound from its recent difficulties in the UK and Australia. Southcorp’s response was to present forecasts that at the end of October 2003 it will have A$1.095 billion in credit facilities, maturing from May 2005, against a forecast net debt of A$941 million by July 1. Much of the speculation regarding Peter Lehmann Wines Ltd comes after its second profit downgrade to 25% less than last year’s A$6.9 million. Factors given by the company to explain this downgrade include the commercial heat in the UK generated by the discounting practices of some larger Australian wine businesses, the rising supply of wine globally and the increasing strength of the Australian dollar. The cancellation of some export orders and the doubling of interest charges associated with the winery expansion didn’t help matters. The 2003 crush for the Peter Lehmann brand was 9,506 tonnes against a 2002 mark of 11,561 tonnes.
