Chapel Down Group (AIM:CDGP) on Wednesday announced it is raising up to £6 million to fund a new soft pressing facility at its Tenterden winery, with a conditional placing of new shares at 43p set to bring in approximately £5.5 million.
The AIM-listed company, England's leading winemaker, said a separate retail offer to new and existing UK shareholders will raise up to a further £0.5 million.
Net proceeds of around £5.1 million from the placing is expected to fund capital expenditure on the soft pressing project (£4.5m) alongside additional working capital to support higher Traditional Method Sparkling (TMS) wine production, with around £0.4 million allocated to fees and expenses of the capital raising.
The project adds a fifth press and additional tank capacity at Tenterden, lifting annual TMS bottle production from 2.1 million to 2.4 million bottles on an average-yield harvest, with flexibility up to 2.8 million bottles in stronger years.
Chapel Down said the investment would redirect around 300,000 bottles a year from lower-margin still and carbonated wine into higher-margin TMS, targeting approximately £2.0 million of incremental annual gross margin, with realisation building in increments from the 2030 financial year.
The company is targeting an internal rate of return greater than 20% on the project, which is expected to be fully operational for the 2027 harvest following construction starting in the fourth quarter of 2026 and completion by July 2027.
The board said the additional capacity supports its ambition of selling around 2.5 million bottles of TMS annually by 2033, equivalent to a 1% share of global Champagne volumes, two years earlier than its previous 2035 target.
Chapel Down reported net sales revenue of £9.4 million for the six months ended 30 June, up 19% from £7.9 million, with TMS net sales up 26% and representing 74% of wine sales, against 70% in the first half of 2025.
International sales rose 66%, driven by the company's US partnership with Jackson Family Wines, which expanded distribution from 11 to 31 states and added a listing in 250 Whole Foods Market stores.
Net debt stood at £14.0 million at the half-year, up from £12.4 million at the last year-end, a rise the company attributed to its capital allocation policy; it also extended its revolving credit facility from £20.0 million to £25.0 million with a further £5.0 million accordion option.
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The company disclosed that continued momentum into the third quarter and confirmed distribution gains for the fourth quarter have led the board to expect an uplift of at least 10% in adjusted EBITDA for the full year compared with market expectations at the time of its September interim results.
Chapel Down also confirmed completion of this year's harvest at 2,706 tonnes, down from 2,882 tonnes in the 2025 financial year, a yield of 3.0 tonnes per acre against 3.7 tonnes per acre last year, which it said reflected a late May frost only partially offset by a strong growing season.
Directors intend to participate in the placing for an aggregate £500,000, led by Lord Michael Spencer and Nigel Wray at £200,000 each, with chief executive James Pennefather and chief financial officer Louan Mouton contributing £20,000 and £10,000 respectively.
The company added that it has also received indicative commitments from two UK institutional investors to act as cornerstones in the placing for up to £2.5 million.