SAM in practice devastated parts of Australia's agriculture sector in recent years and a slump in prices within the commodities market have exacerbated companies' fïnancial difficulties. "The New Zealand market has seen a much more rapid increase in distressed clients over the past year due to significant drops in commodity prices (especially within the dairy sector), a stagnant property market and declining asset values," she says. 'The wine industry in both countries has also been adversely affected by increasing tonnages of fruit as vineyards mature, leading to a massive drop in bulk wine prices. And with the effects of the global fïnancial crisis being feit more by our retail clients, we are witnessing a significant drop in the number of refïnance opportunities as the banking sector's appetite for taking on new loans contracts and property market sales fall." Like her colleagues in Utrecht, Helen explains that mutual trust, respect and commitment between the cliënt and SAM Australia New Zealand are critical for success. "It is very important that the cliënt understands the seriousness of their position and commits to working towards a solution," she says. "Given that the front office works very hard to only take on clients with integrity, we do not have many cases where we are unable to work through the issues with a cliënt. However, it is always made very clear to a cliënt that if they are not prepared to work with us, or if they are not open in their dealings with us, then we will act to protect our position. Thankfully, though, this is very rare." company's structure, and the amount and structure of the debt, as well as the family's reluctance to focus on the importance of cash. Once SAM became involved, a consistent message was delivered - the company needed to address lts high cost structure, debt needed to be reduced significantly from the sale of assets, and the group needed to assess where it wanted to be in the industry. It required tact and a certain forcefulness to persuade the company's family members that the business they had built up needed to adapt in order to flourish in the changing environment, but the outcome was satisfactory. Within one year, the company achieved a AUD 2 million reduction in its cost structure. It also appointed an Executive Management team that included two external parties who could provide independent advice, and this has proved to be an important feature, particularly with a dose-knitfamily-run business. The management of the company agreed that debt reduction through asset sales was paramount and agreed to list the winery This case study focuses on a major, family-run, winery in Australia, which began as a wine grape grower, supplying major wine companies in the 1970s. Today, this winery operates the second largest privately run vineyard in the major wine region of south Australia, having grown the business through debt funding on the back of capital appreciation of the land as the vines matured. In 2002, the company was refinanced by Rabobank. Despite fïnancial projections that showed a satisfactory annual debt amortisation from cash flow, this failed to materialise as the company suffered from a sharp decline in sale prices, the adverse effects of extreme temperatures at harvest, and a high fïnancial burden from debt and hire purchase obligations. In 2006, Rabobank Australia SAM became involved after the company suffered a liquidity crisis that threatened its survival. SAM was concerned about the Today, although the company remains a concern, SAM has built up a close, transparent relationship with the family and continues to help them establish other outlets for their products and to work towards a successful debt reduction. THE WORD complex for sale, which means the company will effectively return to being a fresh grape producer, albeit with a reduced debt level. Unfortunately, this decision coincided with the widespread decline in the Australian wine market, in which minimal assets are currently changing hands. So far, there have been no offers for the winery.

Rabobank Bronnenarchief

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