Treasury Wine Estates (TWE) has refuted assertions by a Sydney-based investment manager that the company is at risk of bankruptcy.

Plato Global Alpha Fund said: “We have a model to estimate the probability of a company going bankrupt, and this is particularly elevated for Treasury Wines. This concern is even more acute with interest rates rising and the macro outlook deteriorating.”

News.com.au notes that “Plato has been shorting TWE since last year, meaning the fund stands to profit if its share price falls”.

A TWE spokesperson said: “We strongly reject any misleading claims regarding bankruptcy. These assertions are entirely false and without foundation. We have had no engagement or prior dealings with the company making these misleading assertions, and given their position as a hedge fund, their claims should be viewed in that context.”

TWE announced in February that its EBITS were $236.4 million versus $225-235 million guidance, a decline of 39.6%. It said the fall reflected the impact of adverse category trends in the US and China, restriction of shipments contributing to parallel import activity in China and cycling of prior year shipments.

However, while TWE shares have fallen 63% over the past year, they rose 1.73% to $3.825 on Thursday following broker CLSA saying it believed the company’s wine brands and inventory could be worth far more than the current share price suggests.

CLSA told its clients TWE offers a compelling opportunity for investors who are willing to back CEO Sam Fischer’s turnaround strategy, as “the stock is trading at, we believe, less than break-up value”.

Fischer (above) has initiated a company-wide transformation dubbed “TWE Ascent”, which aims optimise operational costs by $100 million annually, simplify business processes and strengthen luxury brand performance in key markets. 

Fischer said: “TWE Ascent is the key enabler of this reset. It is a disciplined, multi-year transformation program designed to sharpen our portfolio, simplify the organisation and optimise our cost base, and I am pleased with the progress we have made to date.”

The company’s second-largest shareholder, French investor Olivier Goudet is also continuing to back TWE, buying shares daily. He currently has a 6.13% stake worth about $270 million.

Goudet has told The Australian he believed the company was “fundamentally undervalued” and was likely to increase his stake to just below 20 per cent.