Chapel Down to raise GBP6.0 million to fund soft pressing facility

Chapel Down Group PLC on Wednesday said it plans to raise around £6.0 million to fund a new soft pressing facility at the company's Tenterden winery.

The Kent-based sparkling and still winemaker hopes to raise £5.5 million via a placing at 43 pence per share, and £500,000 by a rights issue, details of which are to be announced.

Chapel Down traded up 5.9% at 45.00p each in London on Wednesday.

Around £4.5 million of the proceeds will fund investment in a new soft pressing facility at the Tenterden winery together with the additional working capital required to support the increased level of traditional method sparkling production resulting from the project.

The soft pressing project will enable around 300,000 bottles of current annual production to be produced and sold as higher-margin TMS wine rather than, as current, lower-margin still or carbonated wine, the firm explained.

Chapel Down is targeting around £2.0 million of incremental annual gross margin, which is expected to increase over time through higher average yields, inflation and improved product mix.

The project is expected to improve quality by cutting the harvest pressing window by nine days and allow higher-yield harvests to be processed in-house, reducing costs.

The project is expected to be fully operational for the 2027 harvest and is targeting the delivery of an internal rate of return of greater than 20%.

Chapel Down believes that the project provides it with the production capacity to achieve by 2033 its ambition of selling 2.5 million bottles of TMS per per year, equivalent to a 1% share of global champagne volumes, two years earlier than its previous target of 2035.

The firm said, at present, it expects capital expenditure requirements to be significantly lower from FY28 onwards as significant investments in vineyards and winery will have been completed. Approximately 25% of FY26 and 75% of FY27 capital expenditure requirements will be funded through the net proceeds from the placing.

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