New Zealand Wine Company says it is facing a "different set of challenges" in the wake of its 2012 harvest delivering a yield 30% lower than its initial forecasts.
Chairman Alton Jamieson says that while the company was very happy with the quality of the 2012 harvest, though the yield was about 30% lower than its initial forecasts.
"We've obviously got less wine to sell," he said. "It's going to provide a different set of problems".
"When you're harvesting 30% less grapes than you anticipate, you still have costs to cover."
Mr Jamieson says the recent fall in the New Zealand dollar is helping the company, but he'd like it to fall further.
The company is pinning its financial hopes on a merger with a US company, which it says would be enough to mitigate its bankers concerns about its debt loading.
New Zealand Wine Company markets the Grove Mill, Sanctuary and Frog Haven brands, but has been in financial difficulty for some time, and is reported to be in breach of its banking commitments.
Grant Samuel has been providing advice on capital restructuring, and has identified Foley Family Wines as a possible merger opportunity.
Foley Family Wines is owned by American billionaire Bill Foley and its brands in New Zealand include Clifford Bay, Goldwater and Dashwood. Last year it bought Martinborough's Te Kairanga Wines.
Due diligence checks on the deal are underway, but a US wine industry magazine suggests the deal will involve Foley Family Wines taking an 80% stake in the company.
Mr Jamieson says more details will be released later but the proposed merger would be enough to satisfy a banker's requirement for it to raise $5 million by the end of June, as well as reduce debt.
