Rearranging the deckchairs on SA Wine

So the pyramid scheme that owns 29% of Distell, the largest liquor corporate in SA by far, is to be semi-dismantled in the semi-Egyptian style.  Holders of JSE listed CapeVin International (CVI) are to be offered 21 shares in unlisted CapeVin Holdings (CVH) which already owns 51% of CVI.  CVH will then be listed on the JSE.  The deal is confusing, not least as the second page of the SENS announcement preceded the first and was obviously compiled by a dyslexic merchant banker with CHV popping up in clause 6.1. Come on Chris (CVI chairman Otto), does anyone read these releases before they hit return on the keyboard?

capevin Rearranging the deckchairs on SA Wine

CVH are up 8.75% on the offer and CVI down marginally.  So the big winner would seem to be Jannie Mouton, whose Zeder holds 39.4% of CVH and Johann Rupert, whose Remgro has 11.3%.  But then Remgro also has 9.6% of CVI, so its swings and roundabouts stuff.

Why didn’t CVH/CVI/CHV go all the way and unbundle the underlying Distell shares to shareholders as both CVH and CVI trade at substantial discounts to their Distell holdings and neither company adds value to shareholders?  The opposite actually, as CVH had R2.5 million and CVI R1.5 million in “expenses” to pass on the Distell dividends and pay for their rooibos tee and Ouma rusks at board meetings.  CVH directors got R20K each and the chairman R25K for sharpening their pencils.

Well the offer claims “due to the nature of certain commercial arrangements to which Distell Group Limited is a party, including certain trademark agreements, the  retention of CVH as the ultimate holding company is required to remain in place and therefore CVH cannot be collapsed into CVI.”  As they say in the Swartland, “I twyfel” – I’m not totally convinced.

It’s time for the boards of CVH and CVI to move on and look for another golden goose to fleece.  Give CVH and CVI shareholders their Distell shares – it will increase the marketability of the tightly held stock and probably push up the price.  Surely liquidity is the aim for a stock that specializes in liquids?

The author owns shares in CVH, CVI and Zeder.