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KWV: MINORITIES’ TRUE-VALUE WORRIES

Shareholders are concerned about Niveus’s intentions around the cash, property and art from KWV’s asset sale to Vasari

It didn’t last long. Just six months after KWV’s operating assets were sold to Vivian Imerman’s Vasari group, hostilities have broken out again between management and some of the minority shareholders.

Leading the charge once more on behalf of the long-suffering shareholders of renamed La Concorde is activist Chris Logan.

Logan and other minority shareholders are becoming increasingly anxious about what Niveus, which holds 57% of La Concorde, might be planning for the approximately R1.15bn cash from the sale to Vasari. In addition, there are some very attractive property and art assets — so attractive they are probably close to cash.

Apart from its stake in La Concorde, Niveus’s operations are focused on gaming through Vukani, which operates limited-payout machines, and Galaxy, which has licensed bingo centres. It is part of Johnny Copelyn’s Hosken Consolidated Investments empire, which is no slouch when it comes to buying, selling and rearranging assets.

It might be this very tendency that is causing anxiety among minority shareholders. They are fearful that one day a circular will arrive on their doorsteps (or by e-mail) describing a plan to spend all the cash on some exotic purchase and inviting them to vote at a meeting a few weeks hence. At that stage, it could be too late to avoid getting sucked into a business that might have little appeal for minority shareholders. They could, of course, exercise their appraisal rights at that stage.

But that route is long and tedious, and not for the faint-hearted. Ask Albie Cilliers, a former minority shareholder of KWV. Cilliers is making company law history through his dogged determination to extract what he believes was the true value of KWV at the time of the Vasari transaction. In late 2016, when Cilliers informed Niveus he was not interested in remaining a shareholder in the new La Concorde, he was offered R13.47/share for his KWV holding. He is fighting to get the approximately R21 he believes it was worth at the time of the transaction.

Logan is certainly not faint-hearted, but for years he has held onto KWV (and then La Concorde) because he believed that one day a management team would generate decent returns from the attractive underlying assets.

Now he just wants Niveus to give shareholders some indication of what the plans are for La Concorde. A special cash dividend would also be nice. At this stage, Logan reckons it’s crucial to get a handle on La Concorde’s current net asset value. The cash component is worth about R15/share, but what of the valuable heritage property and the art? By some estimates that could push the value to more than R20/share. Because no up-to-date details were provided in the most recent annual financial statements, Logan decided last week to head off to the company’s head office in Paarl to inspect the register of land and buildings. Most companies make this information available to shareholders on request. Indeed, in its annual reports until 2010 (when Niveus became the controlling shareholder), KWV informed shareholders they could inspect the register at the Paarl head office.

But when Logan pitched up at Paarl he was handed a single sheet of paper listing the names of various buildings. There were no
values and no dates of acquisition. He was told by La Concorde staff that the list was all he would be given.

Niveus CEO André van der Veen refuses to engage with Logan on the issue and rejects his suggestion that the valuation is being hidden by the board in order for certain shareholders to benefit. So Logan has appealed to Copelyn for details about the fair values of the heritage assets. Copelyn, who is overseas, says Niveus has no intention of concealing the value of the assets. He says the properties are a small part of La Concorde’s net asset value.

“Nevertheless I will be back at the wheel next week and will try to ensure the company is forthright with him [Logan] on the value of Laborie and [La] Concorde,” Copelyn told the Financial Mail.
Source: Financial Mail – Ann Crotty