Fund Overview
	Fund Assets
	Performance & Financial Information
	Unit Prices

 

Banking Facility Update – 22 July 2010

On 14 July 2010 RFM reported that the Agricultural Income Trust Fund 1 (AIT) had breached a key covenant of its debt facilities on 30 June 2010 following receipt of lower property valuations from an independent valuer. Since that time the AIT's banker has advised that it does not consider the AIT to be in breach of it banking covenant which requires AIT to maintain a loan to valuation ratio (LVR) of 60%.

AIT's banker requested valuations based on:

• Going concern market value.
• Vacant possession value.

The lender has accepted the higher going concern value which allows the 60% LVR covenant to be met, but reserved the right to adopt the vacant possession valuation in the future. The vacant possession valuation would provide a breach of the 60% LVR covenant (approximately 61%).

It remains a requirement that the banking facility be reduced to an LVR of 45% by December.

The AIT did breach its debt facilities in June 2009, again on receipt of lower property valuations from an independent valuer. RFM worked closely with the financier and no action was taken at that time to enforce rights under the facility. In March 2010 the AIT facility covenants were renegotiated and a new letter of offer was received from the bank on 5 May 2010 giving an unchanged outright facility and a revised LVR of 60% until December 2010.

In the unlikely event that the bank moves to enforce its rights and RFM fails to rectify through an equity raising or other means, the AIT may have to sell assets to reduce or fully repay its debt. In these circumstances the AIT’s asset values realised may be lower than carried in the AIT's financial statements.

RFM is actively planning an equity raising to restore the LVR to 45% or less by the required timeframe of 31 December 2010. This is likely to entail a rights issue to existing investors and may involve a merger between another fund provided the merger is in the best interests of investors.

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Fund Overview

The Agricultural Income Trust Fund (AIT) is a Registered Managed Investment Scheme, established in July 2000. The AIT owns four vineyards in the Barossa Valley and Adelaide Hills. The vineyards are at varying stages of maturity and produce fruit for ultra premium quality wines. All plantings are contracted to Australian wine companies.

The AIT is closed to new investment.

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Fund Assets

The AIT has four properties located in Barossa Valley and Adelaide Hills.

The Geier vineyard is situated approximately 2km north of the Barossa Valley township of Greenock with part of the property having short frontages to the main Greenock to Kapunda Road. This property is 307.7 hectares in size with 243.04 hectares being planted area. There are 6 different types of grapes grown on this property and 50.8% makes up of Shiraz, 23.5% Cabernet Sauvignon and the remainder 25.7% consists of Merlot, Mouverdre, Riesling and Viognier. The planted areas are contracted with Fosters, Grant Burge, Orlando and Warburn. The Warburn contract expired recently, with Orlando due to expire after the 2010 vintage. Currently negotiations are underway with Fosters showing interest in the Orlando blocks and Grant Burge expressing interest in almost all blocks currently dedicated to Warburn.

The Hahn Vineyard is located approximately 3km south of the Barossa Valley township of Stockwell and approximately 5.5km east of the township of Nuriootpa. This property is 55.87 hectares in size with 50.21 hectares being planted area. The 6 types of grapes on Geier are also grown at Hahn with the majority being Shiraz. The whole vineyard has had a long term agreement with Yalumba Wines with a contract due to expire in 2013.

The last two properties are Mundy and Murphy vineyards. Both properties are situated around Martin Hill Road approximately 2-4km north, north east of the Adelaide Hills township of Forreston and 6-7.5km north of the township of Gumeracha.

The total size of Mundy (32.80 hectares) and Murphy (34.45 hectares) is 67.25 hectares. Of the 67.25 hectares, 55.88 hectares are planted areas. The 6 different types of grapes grown on these properties are Chardonnay, Pinot Gris, Pinot Noir, Sauvignon Blanc, Riesling and Viognier with Sauvignon Blanc being the majority. Mundy is currently renewing contract with Grant Burge Wines whilst Fosters have taken a portion of the Sauvignon Blanc with encouraging signs of renewal after expiration. Murphy has current contract with Casella and Fosters until post 2010 Vintage. Casella is unlikely to renew contract due to heavy amount of unwanted Chardonnay. Grant Burge Wines has expressed very strong interest to take over after grafting process. Current contracts are Casella 18.91 hectares, Grant Burge 21.74 hectares and Southcorp 15.23 hectares.

These two properties receive 1,000mm of rainfall per annum and are also serviced by two bores which are not required to be licensed in the Adelaide Hills region and therefore under no restriction on water use.

Table 1: AIT Assets

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Performance & Financial Information

Table 2: AIT Financial Year Returns

Returns inclusive of Franking Credits.
Past performance is not a reliable indicator of future performance.

 

Table 3: AIT Rolling Annual Returns

Unit Prices

Click here for historical unit price information

Table 4: AIT Unit Price History

N.B. The AIT's financier has advised that they require a reduction in the gearing level of the AIT before 31 December 2010. It is likely that capital will need to be raised for this purpose and that it would be at a discount to NAV. The impact of this dilution has yet to be quantified and therefore has not been included in the 15 March 2010 and 15 April 2010 published unit prices.

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• Offer Documents
• Newsletters
• Management Fee Changes

  26 February 2010

• Investor Update Letter

  13 January 2010

• Half Year Report

  31 December 2009

• Annual Report

  30 June 2009