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PROSPECTUS Rule 424(b)(3)
- ---------- (Registration No. 33-89030)
198,413 Shares
THE CHALONE WINE GROUP, LTD.
Common Stock
_________
This Prospectus relates to the public offering of 198,413 shares of Common
Stock, no par value (the "Shares"), of The CHALONE Wine Group, Ltd. ("CHALONE"
or the "Company") which may be offered from time to time by a shareholder of the
Company (the "Selling Shareholder") who received such shares pursuant to a non-
public offering of the Company's Common Stock under the terms of the Common
Stock Purchase Agreement dated as of March 29, 1993 between the Company and
certain investors (the "1993 Stock Purchase Agreement") and the Common Stock
Purchase Agreement dated as of April 22, 1994 between the Company and certain
investors (the "1994 Stock Purchase Agreement" and collectively with the 1993
Stock Purchase Agreement, the "Stock Purchase Agreements"). The Shares were
issued to the Selling Stockholder pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
provided by Section 4(2) thereof and by Rule 506 of Regulation D promulgated
thereunder. The Company will not receive any of the proceeds from the sale of
the Shares and it will bear the costs relating to the registration of the
Shares, estimated to be approximately $15,000. The Shares have been registered
by the Company pursuant to the registration rights provisions of the Stock
Purchase Agreements. Further, pursuant to the registration rights provisions of
the Stock Purchase Agreements, the Company has agreed to indemnify the Selling
Shareholder against certain liabilities, including liabilities under the
Securities Act.
The Shares may be offered by the Selling Shareholder from time to time in
Nasdaq National Market transactions, in negotiated transactions, or through a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The Selling Shareholder may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholder and/or the purchasers of the Shares for
whom such broker-dealers may act as agents or to whom they sell as principals,
or both (which compensation as to a particular broker-dealer might be in excess
of customary commissions). To the extent required, the specific number of
Shares to be sold, the terms of the offering including the name or names of any
such agent or dealer, the purchase price paid by any such agent or dealer for
the Shares and any applicable commission or discount with respect to any
particular offer will be set forth in an accompanying Prospectus Supplement.
The Selling Shareholder and any broker-dealers or agents that participate with
the Selling Shareholder in the distribution of the Shares may be determined to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution."
The Common Stock of the Company is quoted on the Nasdaq National Market
under the symbol "CHLN."
______________
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS."
______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
______________
The date of this Prospectus is March 6, 1996
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the Commission's
Chicago Regional Office, Suite 1400, 500 West Madison Street, Chicago, Illinois
60661, and New York Regional Office, Suite 1300, Seven World Trade Center, New
York, New York 10048. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. The Company's Common Stock is
quoted on the Nasdaq National Market System, and such reports, proxy statements
and other information can also be inspected at the offices of Nasdaq Operations,
1735 K Street, N.W., Washington, D.C.
Additional information regarding the Company and the Shares offered hereby
is contained in the Registration Statement on Form S-3 and the exhibits thereto
filed with the Commission under the Securities Act. This Prospectus does not
contain all of the information set forth in such Registration Statement and the
exhibits and schedules thereto. Statements contained in this Prospectus as to
the contents of any contract or other document are not necessarily complete and,
in each instance, reference is made to the copy of such contract or document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference. Copies of the Registration
Statement, including all exhibits thereto, may be obtained from the Commission's
principal office in Washington, D.C. upon payment of the fees prescribed by the
Commission, or may be examined without charge at the offices of the Commission.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the Commission are hereby
incorporated by reference into this Prospectus: (i) the Company's Annual Report
on Form 10-K for the year ended December 31, 1994; (ii) the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1995; (iii) the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995; (iv) the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1995; (v) the Company's Current Report on Form 8-K dated May 10, 1995; (vi)
amendment to the Company's Current Report on Form 8-K/A-1 dated August 1, 1995;
(vii) amendment to the Company's Current Report on Form 8-K/A-2 dated August 2,
1995; (viii) amendment to the Company's Current Report on Form 8-K/A-3 dated
September 20, 1995; and (ix) the description of the Common Stock, no par value,
of the Company contained in its Registration Statement on Form 8-A filed April
18, 1985.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering shall be deemed to be incorporated by reference into
this Prospectus and to be part of this Prospectus from the date of filing of
such documents.
Any statement contained herein, or in a document incorporated by reference
herein, shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Upon written or oral request, the Company will provide without charge to
each person to whom a copy of this Prospectus is delivered a copy of the
documents incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference
therein). Requests should be submitted in writing or by telephone to William L.
Hamilton, The CHALONE Wine Group, Ltd., at the principal executive offices of
the Company, 621 Airpark Road, Napa, California 94558-6272; telephone:
(707) 254-4200.
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No dealer, salesman or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus in
connection with the offer made by this Prospectus and, if given or made, such
information and representation must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute any offer to sell or a
solicitation of an offer to buy any securities other than the Common Stock to
which it relates, or an offer in any jurisdiction to any person to whom it is
unlawful to make such offer in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information contained herein is correct at any time
after the date hereof.
THE COMPANY
CHALONE was incorporated under the laws of the State of California on June
27, 1969. It became a publicly-held company in May, 1984. The Company is, to
its knowledge, one of only two publicly-held U.S. corporations whose sole
activity is in the production, marketing, and selling of premium-priced wines.
The Company produces, markets and sells premium white and red varietal
table wines, primarily Chardonnay, Pinot Noir, Cabernet Sauvignon and Sauvignon
Blanc. The Company operates five established wineries; four are located in
different counties of California, one is located in Walla Walla, Washington.
The Company's wines are made principally from grapes grown at its Chalone
Vineyard and Carmenet Vineyard facilities, at vineyards owned by the Company's
partner in the Edna Valley Vineyard joint venture and, for the Company's Acacia
Winery, from grapes grown principally at neighboring independent vineyards, plus
a small vineyard one-half owned and managed by the Company. The Company's wines
are sold primarily in the premium-priced segment of the table wine market under
the labels "Chalone Vineyard," "Edna Valley Vineyard," "Carmenet" and "Acacia."
The Company also owns a 50% interest in Canoe Ridge Vineyard, located in eastern
Washington State, which is planted with Merlot, Cabernet Sauvignon, and
Chardonnay grapes, together with a 51% interest in Canoe Ridge Winery (a
Washington State corporation), dba Canoe Ridge Vineyard, which produces wines
from the grapes grown at Canoe Ridge Vineyard.
The Company also receives an allocation of the wines of Domaines Barons de
Rothschild (Lafite) ("DBR"), including the wines of Chateau Lafite-Rothschild
and Chateau Duhart-Milon, to sell primarily to the Company's shareholders. In
1995, the Company exchanged all of its ownership interest in DBR for a 23.5%
partnership interest in Chateau Duhart-Milon.
RISK FACTORS
THIS PROSPECTUS CONTAINS, IN ADDITION TO HISTORICAL INFORMATION,
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE THOSE DISCUSSED BELOW, AS WELL AS THOSE DISCUSSED ELSEWHERE
IN THIS PROSPECTUS.
Outstanding Debt. The Company has agreements with Wells Fargo Bank, N.A.
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for (i) a $10 million line of credit for the Company, renewable in June 1997, of
which $4.32 million was drawn as of February 26, 1996, (ii) a $4.8 million line
of credit for the Company's Edna Valley Vineyard joint venture, renewable in
June 1996, of which $3.88 million was drawn as of February 26, 1996 and (iii)
four loans due in 1996 in the aggregate amount of $5,441,234. The Company also
has $8,500,000 worth of convertible subordinated debentures outstanding. There
can be no assurance that the Company will be able to renew the lines of credit
for Edna Valley in 1996 or for CHALONE in 1997, or that the Company will be able
to repay (or refinance) the loans due in 1996 or the interest or principal due
on the debentures. Additionally, while such debt remains outstanding there can
be no assurance the Company will be able to obtain additional financing if
needed.
Agricultural Risks. The Company is subject to a variety of agricultural
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risks, any of which could adversely affect its operations. Unusual weather
conditions such as drought, unseasonable rains and frosts, hail and other
factors can adversely affect the quality or quantity of the grapes grown or
purchased by the
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Company. Insects, mites, microflora and various grapevine diseases may subject
vineyards to severe damage. Pesticides and the selection of resistant
rootstocks reduce losses from these causes, but do not eliminate the risk of
such loss. From time to time, the Company has experienced problems with
insects, animals and birds.
The Company's vineyards are planted primarily on rootstocks other than
AXR-1, and thus have been spared the serious outbreak of phylloxera which in the
past several years has infested California vineyards, especially those in the
Napa/Sonoma region. A portion of the vines at the Company's Carmenet Vineyard
are on AXR-1 rootstock, and some phylloxera infestation has appeared. This
infestation has to date spread very slowly, and the Company believes that it can
be contained to less than half of the planted acreage, with the affected
plantings being gradually replaced over time without material impact on
Carmenet's annual production. No assurance can be given, however, that the
infestation will continue to be so controlled or that Carmenet's production will
not be materially affected thereby.
Absence of Dividends. The Company has never paid cash dividends on its
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capital stock and does not anticipate paying any cash dividends in the
foreseeable future.
SELLING SHAREHOLDER
The 198,413 shares of Common Stock of the Company offered by this
Prospectus are owned by the T. Rowe Price Small-Cap Value Fund, Inc.
The shares owned by the T. Rowe Price Small-Cap Value Fund, Inc. were
obtained by it pursuant to the Stock Purchase Agreements and have been
registered under the Securities Act pursuant to the registration rights
provisions of those agreements.
<TABLE>
<CAPTION>
Amount
Positions, Number of of Common
offices or other Shares Owned Stock to be
material relation- as of Shares owned upon
Name of ships with the Company March 5, Offered completion
Shareholder during the last 3 years 1996 Hereby of Offering(1)
- ----------- ----------------------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
T. Rowe Price Small-
Cap Value Fund, Inc. None 198,413 198,413 -0-
</TABLE>
PLAN OF DISTRIBUTION
The Shares may be offered by the Selling Shareholder from time to time in
Nasdaq National Market transactions, in negotiated transactions, or through a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The Selling Shareholder may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholder and/or the purchasers of the Shares for
whom such broker-dealers may act as agents or to whom they sell as principals,
or both (which compensation as to a particular broker-dealer might be in excess
of customary commissions). To the extent required, the specific number of
Shares to be sold, the terms of the offering including the name or names of any
such agent or dealer, the purchase price paid by any such agent or dealer for
the Shares and any applicable commission or discount with respect to any
particular offer will be set forth in an accompanying Prospectus Supplement.
The Selling Shareholder and any broker-dealers or agents that participate with
the Selling Shareholder in the distribution of the Shares may be determined to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any
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[FN]
(1) Assumes all Common Stock included in this Prospectus is offered and
sold by the Selling Shareholder.
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commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Common Stock
offered hereby are being passed upon for the Company by Pillsbury Madison &
Sutro LLP, Menlo Park, California.
EXPERTS
The consolidated financial statements of The CHALONE Wine Group, Ltd.
appearing in The CHALONE Wine Group, Ltd. Annual Report (Form 10-K) for the year
ended December 31, 1994, have been audited by Deloitte & Touche, LLP,
independent auditors, as set forth in their reports thereon included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.
