Treasury Wine Estates rejects bankruptcy speculation
Australia’s largest wine producer has dismissed claims that rising debt could push the company towards bankruptcy. Treasury Wine Estates says it has sufficient liquidity despite heavy short selling and a sharp fall in its share price.
Australia’s biggest wine producer, Treasury Wine Estates, has rejected the idea that it is so indebted that it could collapse into bankruptcy.
The company dismissed the idea it needs to raise money to fix its balance sheet debt.
“We’re comfortable with our current funding position and have ample liquidity,” a spokesperson said.
Investor fund raises alarm
The suggestion was mooted by the AU$3.4 billion Plato Global Alpha Fund, which said it thinks Treasury Wines could go bankrupt as its debt problems run up against a general economic downturn from rising interest rates and sinking consumer confidence.
Partner Content
Shares in the winemaker have collapsed 63% in the past year.
“We have a model to estimate the probability of a company going bankrupt, and this is particularly elevated for Treasury Wines,” warned Plato. “This concern is even more acute with interest rates rising and the macro outlook deteriorating.”
Heavy short-selling in the market
The Plato Fund could profit if Treasury’s share price falls further and therefore its views are not without some self-interest but other professional investors are also betting heavily against Treasury with 12.9% shares shorted as of last week.
Shorting is a financial manoeuvre involving borrowing shares in a company and selling them on the prospect of repurchasing them at a lower price at a later date. The hedge funds involved are betting that Treasury’s AU$1.9 billion debts will further discourage investors and push the shares lower than today’s AU$3.75. In 2018 they topped AU$18.50.
Investor backs long-term outlook
Treasury’s CEO, Sam Fischer, is focusing on improving cash flow and the company was recently given a vote of confidence when French billionaire Olivier Goudet took an AU$244m (£122m) stake in Australia’s biggest wine group, saying that he believed in its future and was investing for the long-term.
Related news
Olivier Goudet increases Treasury Wine Estates stake
Former Treasury Wine Estates executive calls for broader overhaul
