BEVERAGES: Whispers In The Vines
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THERE’s a rustle in the vineyards of the Cape’s top wine farms again.
At the time of going to press the Boschendal Wine Estate in Franschoek looked set to undergo a significant change in ownership, while rumours around the sale of Constantia Uitsig in Cape Town’s southern suburbs had become increasingly audible.
CBN has in the last year already reported on two significant wine farm transactions, involving Lanzerac in Stellenbosch and Klein Constantia. Both Lanzerac and Klein Constantia (owned by retail tycoon Christo Wiese and the Jooste family respectively) were sold to foreign buyers, and in both instances the purchase price was not disclosed.
Rumours of the sale of Uitsig, jointly controlled by former merchant banker and well known local businessman David McCay and empowerment group Mvelaphanda Holdings, have long been circulating.
CBN has heard that the property is not churning enough cash flow to cover the cost of running the estate and maybe the debt load of its big investors - which suggests that a sale is inevitable sooner rather than later.
At this point it is not clear whether McCay and Mvela both want to sell their respective stakes. But a price tag of R180 million has been bandied about for Uitsig. It is understood McCay is a keen seller, which may even raise the question of whether Mvela could look to buying outright control of the wine estate.
There seems little doubt that debt triggered a deal that might see a new major shareholder emerge at Boschendal.
In July resort property developer IFA Holdings sold its 37.33% stake in Boschendal to Canombys for the nominal sum of R1. Canombys, if the conditions of the sale are met, will also buy IFA’s R163 million debt linked to 2 240 hectare Boschendal property for just R80 million.
Readers may remember that last year IFA and JCI, which owns the remaining 62.67% stake in Boschendal, proposed selling the estate to Cinmark for around R700 million. This deal, though, fell through when the conditions of the sale were not met by the buyer. In this regard CBN notes that the conditions precedent to the Canomby’s deal with IFA have been extended twice.
It seems Canombys - of which very little is known at this stage - is busy finalising funding. JCI recently reported it had entered into a R80 million share issue agreement with Canombys the net effect of which JCI’s shareholding would reduce to 49% and Canomby’s to 51%. Part of the deal will see Canomby’s advancing R80 million to Boschendal as a shareholder loan, and then Boschendal will raise another R20 million via a rights offer.
Fresh capital is critical to Boschendal as the property is currently the site of a proposed mixed-use development.
JCI confirmed that Boschendal (which was once owned by Anglo American) was currently operating at a loss and was in need of a cash injection to provide the necessary working capital in order to fund its ongoing operations.
JCI said the Canomby’s transaction would provide Boschendal with cash required to meet its operational cash flow requirements and to invest in infrastructure that would allow the marketing and sale of Phase 1 of Boschendal’s proposed mixed-use development to progress.
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