Lender spends 'several hundred thousand dollars' on vineyard, winery since early 2009

NAPA – Kirkland Ranch Winery, ownership of which reverted to a lender in April, is being reborn this week as an all-custom winemaking facility under operating agreements with Napa firms.

Now called Valley Gate Vineyards, the 10-year-old facility closed when a buyer didn't emerge from a number of bids in an auction in December. Colorado-based Madison Vineyard Holdings foreclosed on $21.5 million in outstanding loans to the Kirkland family business and has spent several hundred thousand dollars on the vineyards and winery to make them suitable to be able to be held for a long time or attractive to any buyers, according to Kjerstin Hatch, who oversees Valley Gate from Madison's San Francisco office.

"We have no intention to let the vines to wither or the facility to lay underutilized," Ms. Hatch said.

To engender confidence among custom-processing clients or potential buyers, Madison brought in Renteria Vineyard Management to revive vine yields and fruit quality and X Winery to advise on turning around the operation of the winery. X Winery has its wine made at small-lot custom winemaker Bin to Bottle, which has been brought in to operate the Valley Gate winery.

The south Napa property, located off Jameson Canyon Road near the intersection with Highway 29, includes 97 acres of vineyard and 106 plantable acres. Madison brought in Renteria Vineyard Management to boost the yield and quality from the fruit, both of which have increased dramatically from previous year, according to Ms. Hatch.

The property had suffered during several years of cash-flow issues resulting from a soured joint venture with the former owner of Viansa Winery & Italian Marketplace near Sonoma that pushed certain family businesses into bankruptcy protection, according to Ms. Hatch.

Madison acquired a $20 million loan on the Kirkland Ranch Winery property from Traveler Insurance and provided another loan when the Kirkland business emerged from bankruptcy in the second half of 2007. Part of the balance on the loans was paid from proceeds on a sale of about 2,000 acres of the originally 3,000-acre ranch in 2008 to Silverado Premium Properties.

The winery itself has a 57,000-square-foot winery able to crush 3,300 tons of grapes, store 247,000 gallons of wine in 140 tanks and 3,000 barrels, and bottle 500,000 cases a year. The three-story winery also has a 6,000-square-foot tasting room with a 2,000-square-foot banquet room and a permit for up to 80 events a year.

Bin to Bottle's staff of 30, which nearly doubles at harvest, will oversee both operations, which are located a short distance apart. Bin to Bottle focuses on wines made from five to 20 tons of grapes.

Processing costs start at less than $500 a ton for large lots with a 10-ton minimum.

Madison also has applied for a distilled alcohol license to be able to offer alcohol-management services, which currently are being offered in Napa Valley mainly by mobile units. In January the facility will be available for bottling services.

"We hope this is sort of a phoenix for the valley," Ms. Hatch said.