LOSS-MAKING winemaker Cockatoo Ridge has been recapitalised through the placement of $2 million in new stock, with the cash earmarked to fund a push into export markets, including China.
The company, which had a market value of just $1.73 million before the capital raising, has issued 400 million new shares at 0.5c apiece, primarily to existing investors.
Managing director Peter Perrin said the placement would boost general working capital and expand wine exports during the current period of favourable exchange rates.
"One effect of the worldwide economic downturn is that consumers throughout the world are shifting to cheaper wines and that is of considerable benefit to Cockatoo Ridge, especially given the steep fall in the Australian dollar," he said.
This had also resulted in China becoming Cockatoo Ridge's largest export market, and the company aims to increase Chinese sales from 100,000 cases per year to 250,000 by the end of 2010, aided by the recent signing of a supply agreement with one of China's largest wine and spirits distributors.
A new distribution agreement in the US was also expected to increase export sales for the company, which reported a $1.6 million loss for the 2007-08 financial year.
With an eye to returning to profitability in the 2009-10 financial year, Mr Perrin said Cockatoo had cut annual operating costs by $1.3 million through staff redundancies and the renegotiation of distribution contracts.
It had also sold the $1 million Norman's wine brand and trademark to a subsidiary of discount wine retailer Get Wines Direct.
Cockatoo Ridge shares closed at 0.6c on March 3, before being placed under a trading halt while the capital raising was completed.