Cosentino defaults on $18M in debt

YOUNTVILLE, April 9, 2009 – Cosentino Signature Wines plc today said it defaulted on its most recent interest payments on $18 million in debt, but the publicly traded wine company said it is in talks for refinancing and new working capital.

A month ago, Cosentino announced it was in "advanced negotiations" with senior holders of that debt as part of fiscal streamlining that included giving back three properties involved in an August 2007 sale-leaseback. Today the company said the lenders won't refinance the debt, but they "remained supportive" of efforts to find those that could.

Cosentino's announcement today also noted that the company has started discussions with "several other interested parties" to refinance the debt and generate working capital, part of which would be used to compensate owners of the recently vacated properties in Pope Valley in Napa County and in Lockeford and Clements in the Lodi-Woodbridge winegrowing region.

In 2007 Cosentino moved Lodi-area wine production from Lockeford to Clements and turned the Lockeford facility into a custom winery.

Cosentino consolidated operations to the winery it owns in Yountville and a recently built leased facility in Woodbridge. The company has applied for an expansion in production in Yountville from 12,000 cases per year to 40,000. Both operations are supposed to have positive cash flow "in the near term," according to the company.

The company has tasting rooms at the Yountville winery and a newly relocated Lodi-Woodbridge venue in Acampo. Those retail locations have been "busy," but the company's core wholesale business "has not yet improved as expected," according to the statement today. Cosentino is hoping shipments will pick up this month and next as inventory of cases already shipped dwindles.

Executive winemaker Mitch Cosentino started Cosentino Signatures Wines in Modesto in 1980 and relocated to Yountville in 1989. Larry and Edie Soldinger became partners in 1992, and now they and their entities own most of the shares. The company acquired 160 acres in Pope Valley in 1999 and opened the CE2V Estate Winery there in 2007. The 20-acre Lockeford vineyard property was purchased in 2000, and a winery for the Crystal Valley Cellars brand was finished there in 2004. That brand was relocated to a winery finished in 2006 on 40 acres purchased in Clements.

Today's closing price of the company's stock, traded in the London Stock Exchange's Alternate Investment Market, was ₤5 a share, a decrease of 20 percent or ₤1.25 a share from yesterday's closing price.