The trading of these securities is believed to be the first arrangement of its kind in the world.
Establishment of the wine securities market involves the securitisation of wine at the time it is bottled by premium wine producers.
The wine, which becomes the physical asset underlying the security, is delivered to secure, climate controlled facilities prior to being offered to the public.
AWX intends to manage this securitisation process, which gives wine producers access to the working capital tied up in their inventory, with NSX agreeing to provide the listing and trading mechanism.
AWX will focus on premium wine and expects 110 listings in the first year, with Orlando Wyndham, Katnook Estate and Howard Park among producers that have registered their intent to list wine.
The attraction for investors is that they will be able to get an allocation of often difficult to obtain premium wine at pre-release prices and trade securities covering a variety of wine types, brands and vintages.
According to Mr Steven Pritchard, Chairman of the NSX, the alliance with AWX had a number of advantages for investors and the industry which met NSX’s objectives.
“It meets our stock exchange’s objectives of providing alternative listing and investment opportunities and it also provides a boost to the local economy by helping the Hunter Valley wine region,” Mr Pritchard said.
“It should also prove to be an attraction to stockbrokers wanting to become new members of the exchange,” Mr Pritchard added.
Among the next steps before securities trading begins are the finalisation of the prospectus documentation and securing ASIC approval for wine securities trading.
This process is expected to be complete during the first half of 2001.
Mr Stephen Thompson, former head of e-commerce for Toll Holdings Limited, originator of the AWX idea and now Chief Executive Officer of AWX, said the NSX provided the final link in the chain.
“With support from the wine industry and infrastructure arrangements in place we are now ready to put a sound proposition to investors,” Mr Thompson said.
Once securitisation arrangements have been finalised, NSX expects a significant increase in listings as a large variety of wine types are brought to the market.
Founding partners in AWX are Toll Holdings and Sun Microsystems.
The AWX Board comprises Mark Rowsthorn, Toll Holdings’ largest shareholder and Executive Director, and Bob Watson, director of several private companies including Seek.com.au.
AWX Advisory Board members include Russell Bate, Managing Director of Sun Microsystems Australasia, Russell Berry, Partner Clayton Utz, and Gary Crittenden, CEO of the soon to be listed Dromana Estate.
Among supporters of the trading of AWX securities are stockbroking firms, Salomon Smith Barney and E*Trade Australia, and leading wine industry participants including Nelson Fine Wine Company and the Philip Murphy retail chain. AWX is well advanced in securing its ten founding broker members.
An additional component of the agreement between NSX and AWX is that AWX is to receive an equity option in the NSX.
Originally established in 1937, NSX re-opened for business earlier this year.
Brokers registered to trade shares on NSX include the original four Newcastle firms, Pritchard & Partners Pty. Limited, Scorers, J. M. Tonkin & Company, H. H. Walls & Company together with four new Sydney firms Cameron Securities, Reynolds & Company Pty. Limited, Salomon Smith Barney Australia and Westpac.
Trading on NSX takes place on the Newcastle Electronic Trading System (NETS), a derivative of the ASX’s world class SEATS system and used under license by the NSX.
Settlement of trades on NSX will occur via CHESS on a T+3 basis and initial trading hours will be between 1030 and 1230 hours.
The first new listing on the NSX, Pegmont Mines NL, is expected in December this year.
Pegmont Mines NL is an exploration company operating in the Mount Isa region of north-west Queensland with interests in two advanced stage exploration projects at Pegmont Deeps (lead-zinc) and at Mount Kelly (copper-gold).
