Lark seeks AU$22.5 million

Australian distillery Lark has entered into a strategic partnership with Seppeltsfield Wines and aims to raise approximately AU$22.5 million (US$14.7m).

Seppeltsfield Wines is one of Australia’s oldest distilleries, based in the Barossa Valley. One of Lark’s directors, Warren Randall, is the executive chairman and proprietor of the winery.

Tasmania-based Lark said the 10-year partnership would provide exclusive access to premium oak barrels, ensuring certainty for the company’s future maturation needs.

The move is said to create a ‘competitive advantage’ for Lark.

The winery will provide Lark with first right of refusal to casks including tawny Port, Tokaji, apera, Pedro Ximénez, oloroso Sherry and Muscat barrels. These barrels are key to Lark’s ongoing expansion plan, both globally and domestically, the company said.

According to the announcement on the Australian Securities Exchange (ASX), the agreement includes the option for Lark to extend the deal by another decade.

In addition, the partnership includes joint research and development trials and provides Lark with exclusivity on naming rights and usage for whisky products.

Furthermore, the distillery plans to proceed with a AU$15m (US$9.8m) conditional share placement, with AU$14.5m from Seppeltsfield Wines (through Randall) and the rest of the sum committed equally by directors Domenic Panaccio and David Dearie.

The Australian whisky maker is also issuing new shares at AU$0.85 (US$0.56) per share to raise approximately AU$6.5m (US$4.3m) and intends to secure up to AU$1m (US$654,820) through a share purchase plan.

‘Accelerate growth’

Lark CEO Sash Sharma added: “The strategic partnership with Seppeltsfield marks a significant milestone for Lark. This, in addition to the equity raise being undertaken, will equip Lark with the resources to continue to produce exceptional whisky while providing the balance sheet flexibility to invest in our brands, facilities and distilling production.

“Our goal is to accelerate our growth and drive increased shareholder returns through these strategic initiatives.”

Sharma said the deal would also provide a “solid foundation for Lark’s future portfolio and brand offerings”.

The proceeds from the equity raise would also be used to further develop Lark’s Pontville plant by increasing production, and help the distillery expand into global travel retail.

Sharma added: “Upweighted brand and marketing spend will see Lark investing ahead to enhance global appeal and build awareness, positioning us well for success in new markets and channels. Additionally, we plan to enhance our cellar door experience in Hobart to better engage with our consumers and trade partners.

“Finally, this investment also supports further development of the Pontville site, expanding production and storage capacity as we aim to establish Pontville as the long-term home of the Lark brand.”

Seppeltsfield previously made a strategic investment in Lark’s parent company, Australian Whisky Holdings, in 2018, which was reformed as Lark Distilling Co in 2020.

Meanwhile, Might Craft (formerly known as Founders First) partnered with the ex-chairman of Lark Distillery in 2020 to develop a new whisky business.