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Tuesday 23 September 2014

US fund buys $25m of Treasury shares

6th February, 2014 by Lucy Shaw

US fund manager Wellington Management has given struggling wine company Treasury Wine Estates a cash injection by splashing out AU$25m on shares in the company.

As reported by The Sydney Morning Herald, Boston-based Wellington Management snapped up the shares late last week while other investors were busy bailing out on TWE as share prices in the company slid 20%.

The drop in share prices came after Treasury revealed a AU$40 million (£21.2m) profit downgrade as it came out of a trading halt.

Wellington spent AU$5.4m on Treasury shares last Thursday and a further AU$19.8 million on Friday in order to lift its holding further.

The company – one of the largest private, independent investment management companies in the world – is now one of Treasury’s largest shareholders, with a 5.73% stake, according to the Australian Securities Exchange (ASX).

The news comes as global fund manager and Treasury Wine Estates shareholder, BlackRock Group, dipped below the 5% mark after lightening its holding in TWE last week.

The latest hangover for Treasury is being blamed in a slowdown in demand for its wines in China, which some analysts estimate may account for as much as 20% of the company’s Asian sales volume.

Treasury, which owns over 80 wine brands, including Penfolds, Wolf Blass and Wynns Coonawarra, reported a 53% profit slump in its full-year results last August, which led in part to the stepping down of Treasury’s CEO, David Dearie last September.

Last July, TWE was forced to destroy six million bottles of “old and aged commercial stock” worth £21.4m in the US due to declining sales and falling shipments.

The company is facing legal action from Australian shareholders over the incident.

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