Zeder ups KWV stake to 31%

Cape Town - PSG-owned agri-business investor Zeder has topped up its stake in the Paarl-based liquor group from 26.2% to 31.1% after underwriting a R150m rights issue, it was disclosed on Monday afternoon.

KWV, which recently separated out its stake in Distell, raised R150m in new capital to fortify its balance sheet in the prevailing tough trading conditions.

Zeder and VinPro were the underwriters for the rights offer in the ratio of 78.6% to 21.4%. VinPro's stake in KWV has increased from 7.3% to 8.5%.

KWV's rights offer pitched 24.2m new shares in the ratio of 54 new rights at 623c/share for every 100 KWV shares already held.

The rights price represented a substantial discount on KWV's latest traded OTC (over-the-counter) price of around 800c and an even bigger discount on the last stated net asset value of 2 400c/share.

Despite the seemingly attractive rights offer pitch, KWV announced that shareholders subscribed for 20m shares or 83% of the rights offer.

That meant Zeder's underwriting commitments secured 3.2m new KWV shares and VinPro almost 900 000 shares.

Zeder - which owns stakes in a number of unlisted agribusinesses - has previously indicated a willingness to build its stake in KWV closer to the 35% shareholding level.

KWV CEO Thys Loubser said was encouraged by the high number of shareholders that supported the rights issue.

"This is a clear indication that they believe in the future potential of KWV. We regard this as a vote of confidence in the new, focused KWV."

But one market source questioned the seemingly large number of rights - in the form of nil paid letters (NPLs) - that were allowed to lapse.

He pointed out that the 4.1m shares that reverted to the underwriters was substantially more than the number of KWV NPLs that had traded.

"It seems the OTC market might not be that that efficient as shareholders could have cashed these in. Or else some shareholders simply did not understand the rights offer mechanism."

- Fin24.com