Delegats IPO

[rmbbrave]

Delegat's to go ahead with float
11 December 2005
By GREG NINNESS

Delegat's Group says it intends to proceed with a public float and appears almost certain to make a new bid for majority control of associate company Oyster Bay Marlborough Vineyards.


"We are going to go to the market with an IPO (initial public offer)," Delegat's chairman Robert Wilton said.

"We are going through due diligence and our investment advisers are saying we've got two years of forecasts to undertake. We will be presenting Delegat's to the market as a growth stock."

Wilton also dismissed concerns that Delegat's may have difficulty raising the money to finance a successful bid for control of Oyster Bay.

"I don't give a stuff what the brokers say," Wilton responded when told of those concerns.

"We do not do anything without having the funding in place. We have very, very strong support from the financial markets and they believe in what Delegat's has done and in what it is going to do."

Delegat's successfully fought a takeover battle for Oyster Bay with Marlborough investor Peter Yealands, winning with a bid of $4 a share.

But its takeover declared was void after a court challenge.

Yealands has said he will bid again at $4.50 a share.

The Delegat's float is unlikely to proceed until the ownership of Oyster Bay is resolved, but several aspects of Delegat's finances are likely to affect investors' appetite for shares. They include its negative cash flow of $3.4m in the year to June 30 and that it doesn't own its vineyards.

Apart from Oyster Bay, in which it is a 33% shareholder, Delegat's has sold most of its vineyards to the Australian unit trust Challenger Wine Trust, on a sale and lease-back arrangement.

Wilton said the company's negative cash flows were a result of its strong export growth, which had stretched its debtors ledger and made it necessary to increase its inventory levels.

Asked if he saw cash flow moving back into positive territory, Wilton said, "Oh yes, too right. Because what happens is your growth curve starts to taper off and what you have then is a stable debtors' ledger and a stable inventory."

He would not say when he expected that to happen. He was also confident potential investors in Delegat's would not be deterred by the fact it didn't own its vineyards because the value of the company was in its ability to produce "super-premium wines" and the strength of its brands.

"I'd love to put the brands on the balance sheet. Unfortunately I'm not able to," Wilton said.

The company's other main asset is its $70m Marlborough winery, due to be completed in time to process next year's vintage.

But Delegat's could still feel a squeeze if Oyster Bay's independent directors take a more hard-nosed approach to grape price negotiations. The struggle with Yealands has focused attention on the supply deal with Oyster Bay and tougher pricing could cut Delegat's profit by 20%.

[kura]

After they tried to shaft the OBV shareholders (withholding relevant info) then, surely their credibility would have to be questioned, would it not ?? IPO would only be beneficial to Delegat family IMHO (just look at listed ASX wine companies) the glory days of wine companies surely must have passed us now, they should have looked at listing 5 years ago.

[croesus]

My understanding is they paid less then the going rate for quality OBV grapes, if that is true, I won't partake in their float.

[rmbbrave]

Delegat's shares to be offered at $1.40 each

16.03.06 1.00pm


Delegat's Wine Estate said today it would offer 32 million shares to the public at $1.40 each as part of its long-awaited IPO.

A priority pool of shares will be reserved for Oyster Bay Marlborough Vinyard (OBMV) shareholders and to those who sold OBMV shares to Delegat's under its partial offer in January, and to Delegat's noteholders

Noteholders will be allocated 3.57 million shares worth $5 million and OBMV shareholders (excluding Delegat's) will be entitled to 30 per cent of the IPO, or 4.8 million shares.

The IPO kicked off yesterday, with an institutional book build in which shares were priced between $1.40 and $1.60 each.

A price between $1.40 and $1.60 would give Delegat's a market capitalisation of about $160 million.

The offer opens on March 27.

A float has been mooted for two years but Delegat's protracted battled to secure OBMV seriously distracted it.

Delegat's got into a bidding war with Marlborough entrepreneur Peter Yealands for OBMV, who forced Delegat's to lift its initial offer from $3.10 a share to $6.

Delegat's is New Zealand's third-largest wine exporter and has recently built a $70m winery in Marlborough.

The company is headed up by managing director Jim Delegat and his sister, Rosemari. It was founded by their immigrant parents Nikola and Vidosava in 1947.

The family is expected to cut its holding from 100 per cent to about 65 per cent.

- NZPA

[rmbbrave]

October dividend set for Delegat's
25 March 2006
By DAVID HARGREAVES

Shareholders in Delegat's Group may get their first dividend in October, projections with the winemaker's share float prospectus show.


While the projections come with qualifications as to whether they will be achieved or not, they incorporate the possibility of a payout of $1.3 million, or 1.3c a share for the year to June 30.

Delegat's is raising $45 million by selling 32 million shares at $1.40 each.

The offer opens on Monday and closes on April 13, and the shares ar elikely to list on NZX on April 21.

The offer values the company at $140 million.

Directors Jim and Rosemari Delegat will continue to hold about two-thirds of the Delegat's stock once the company lists.

The prospectus discloses that as managing director, Jim Delegat will be on a salary package of $750,000 a year, while his sister Rosemari Delegat, the executive director, will be on a package of $370,000.

Both are entitled to six months worth of redundancy compensation.

Profit projections in the prospectus show Delegat's earning $4.4 million after tax in the year to June, rising sharply to a profit of $13.8 million for the 2007 financial year.

Under a complicated formula, the Delegats have agreed to compensate new shareholders by cancelling some of their shares if the 2007 profit falls short of $13.8 million – though this has been capped at a level of $2.25 million below the projections.

Revenues are projected to rise from $58 million for the June 2005 year to $80.8 million in 2006 and $122.5 million in 2007.

The long-planned Delegat's float was delayed last year while the company was embroiled in a messy takeover bid for Oyster Bay Marlborough Vineyards.

Delegat's finally achieved majority control of Oyster Bay early this year.

The prospectus shows that the delays have had an impact. In 2004 Delegat's issued $35 million of capital notes. Under the terms of the issue, the interest rate payable on the notes would increase if the company did not have a share float by November 15, 2005.

As a result, the interest rate on the notes increased from 9.75 per cent to 11.25 per cent on that date. The rate will drop again once the float is completed.

Also in November, Delegat's signed up for up to $12 million in "bullet cash advance" facilities from Westpac.

The prospectus shows that as of December 2005 the company's average weighted interest costs on its unsecured subordinated debt was 16.83 per cent, compared with 8.61 per cent on its secured bank loans.

The $45 million to be raised from the float will go toward repaying debt and will help to support the $73 million development of the company's new Marlborough winery.

[rmbbrave]

Jim Delegat provides answers for Delegat's Group

01.04.06
By Liam Dann


Delegat's Group - which owns the popular Oyster Bay brand - unveiled plans to list on the stock exchange this week. Managing director Jim Delegat took some time out to say why the company is heading down the public path.

Why bother listing a wine company on the stock exchange? Why does the company need cash?

We've felt for a long time that Delegat's would be well suited to public listing because it's successful, it's in a business that people love to be part of and it's got great opportunities. The cash raised in the IPO is about funding the strategies driving expansion and global growth. We could have elected to stay private and not grow, but where's the fun in that?

There's been a lot of talk about timing and negative sentiment in the market. How have you found the reaction from brokers and investors?

Talk is cheap. The tangible reaction has been positive - the IPO has been on the radar for a long time and I've never had any reason to be concerned about our prospects.

Is the wine industry a high-risk investment?

Risk has many dimensions - the business you're in, your position within that business and how you run your business. We're aware of the risks we face - the largest being climate and currency - and we manage accordingly.

How much of a hassle was last year's battle (with Peter Yealands) for control of Oyster Bay Marlborough Vineyards?

It was a distraction but Delegat's had made a set of commitments to Oyster Bay when that company was floated in 1999 and we were determined to honour them.

Why did you need control? You owned the rights to the brand.

From our perspective, it wasn't about getting control because we had always been happy as a 32 per cent shareholder. Our business relationship with Oyster Bay was on a solid footing, governed by arm's length contracts and a good commercial framework that served the interests of both companies. The takeover contest was about the future of Oyster Bay. When Mr Yealands made his move, we could not be sure that he would be committed to the direction of Oyster Bay as we were. We felt we had to act.

You and your partners have offered investors a kind of personal guarantee that Delegat's will meet its prospectus target for 2007. Why?

It's not so much a guarantee as an offset - if the company doesn't meet its 2007 earnings projection the Delegat family will have some shares cancelled, increasing the other shareholders' equity in proportion to the shortfall.

We did it as a demonstration of confidence and goodwill.

What's your favourite wine at the moment?

All wine, but the choice depends on the occasion.

[Yossarian]

Does anyone know whether it is worth putting an applcation in for shares via the public pool? Most of the shares seems to be reserved already (Oyster Bay shareholders, Delegats noteholders, etc)?

[KJ]

I spoke to ABN AMRO CRAIGS today who are sending me an investment statement-they tell me that I should get some.I think that you will have to join up as a customer.

[Major von Tempsky]

Delegats was forced to buy control of OBV to stop any more of their dirty linen being aired.
They're forced to do a float to restore their cash position after the forced takeover of OBV.
You'd be joking if you saw any mileage in Delegats for ages.
Besides which don't forget Warren Buffett - he doesn't take part in going for new floats. Rightly says that generally they're at too high a price and the profit all goes to the floater.
Don't forget Mike Pero, Feltex & &.
And if you still have an unreasonable bug for Delegats, wait until after the float and the price has crashed to buy them more cheaply.
Besides which Delegats deserves to be punished for ripping off the minority investors in OBV for so many years, hiding the manipulation of OBV grape sales to Delegats, and telling so many fibs.

[rmbbrave]

I half agree.

The chances of the Delegats SP going down on opening day is too high for my liking.

However having a blanket rule on not buying in IPO's is just stupid.

Remember Vector, GFF, NZF. Each IPO should be considered on it's merits. I'm not just talking about fundamentals either but things like how much hype (misplaced or otherwise) has been generated.

MTV you're too quick to generalize - that's one of the reasons you make so many mistakes and fail to learn from them.

[Major von Tempsky]

That's why I retired early, rich, and you didn't old chap.
I agree there are a handful of good IPO's and I even participated in some of them Telstra 1st tranche, ditto Telecom, Cap Props, Contact...most are privatisations.
But the other point you have ignored is that you can only get peanuts in a good IPO which is another reason why they are not worth it.
If you can get lots...think Feltex etc....
If you can't, why are you only playing for peanuts?

[Lawso]

As a D bondholder they've told me I'm entitled to just 2000 shares in the IPO. But nah! As MvT puts it, why play for peanuts? And I'm wary of the reported worldwide wine glut. Delegats can say they won't be affected because they're at the premium quality end of the market. But they would, wouldn't they? Does the rest of the world agree?

Think I'll watch and wait until well after the IPO.

[rmbbrave]

quote:Originally posted by Major von Tempsky

But the other point you have ignored is that you can only get peanuts in a good IPO which is another reason why they are not worth it.


Again a generalization and again wrong.

For the Vector IPO you could have got as many as you wanted if you were prepared to buy the bonds. I bought $80,000 worth of bonds to get $40,000 worth of shares and had to set up a nominee account to do it. Anyone could have done this for much more money.

In the NZF IPO, I only asked my broker for $10,000 worth and he asked me if I wanted more.

[Lawso]

So, are you still holding all those VCT, rmbbrave? The stock has been very disappointing. Lousy 6cps dividend last week and the price seems stuck around 270 with little apparent buying interest. I've sold down and made a modest gain but there are much better places to put your money IMO.

[rmbbrave]

No.

There are long gone!

I sold soon after the IPO, not at their peak unfortunately, but not long after.

[Footsie]

I didnt go in because i thought the growth assumptions were unrealistic - even with Jim's promise to cancel 22.5m worth of capital.

p/e of 32x on june 06 is just too rich.
oyster bay is a great brand though...
But their forecasts are not realistic. i noticed in the prospectus that when the issued the capital notes that had forecast earnings for FY05 and they failed to meet those by 15% i think.

i'll wait and see if 22.5m is wiped off the market cap after the ipo.

Around $1 to $1.10 i'd be interested.

As a banker you see ridiculous growth assumptions all the time. after a while you learn to question them and in the end become a sceptic.
The market always punishes stocks that fail to meet expectations.

[KJ]

Tend to agree-EBIT projections 2006 $12.6m-2007 $29.5m-put me off.
Will wait and see.

[rmbbrave]

Support for Delegats' offer

15.04.06
By Stephen Ward


Wine company Delegats' $45 million share offer, which closed Thursday, was expected to be fully subscribed, the float's joint lead manager says.

James Beale, investor banking director at ABN Amro Craigs, said his confidence of full subscription was based on interest and applications.

"There's been really good support from the brokers and good public support."

Just over 32 per cent of Delegats was offered, with listing of the shares due on Friday April 21.

Australasian institutions and New Zealand brokers had been offered $30 million worth.

Another $15 million of stock has been set aside for Oyster Bay shareholders, Delegats noteholders and the public.

Beale expected to be able to confirm the subscription level on Tuesday, while a scaling meeting was due that afternoon.

Cornerstone shareholders Jim Delegat, Rose Delegat and Robert Wilton took the unusual step of offering a sweetener of up to $22 million from their own pockets if prospectus targets were not met.

Should 2007 net profit fall short of $13.8 million, they agreed to cancel some of their shares to boost the equity level of new shareholders.

Wine firm's float

Raising: $45 million.
Issue price: $1.40.
Stake being listed: 32.1 per cent.
Market cap: $140 million.
Enterprise value: $255 million.
P/E: 10.1

[Footsie]

rmbrave

That article is wrong... prospectus states FY06 p/e.... (ie still a forward p/e) is 32x

10x is FY07....
i'm sure you could find plenty of NZX companies on FY07 p/e's of 10 !!

[rmbbrave]

Highly likely Footsie,

The Herald makes more mistakes than MTV.

[rmbbrave]

Delegat's shares expected to beat $1.40

19.04.06
By Stephen Ward


Shares in wine company Delegat's are tipped to trade at more than their $1.40 offer price when they list on Friday.

Joint lead manager ABN Amro Craigs announced last night that Delegat's $45 million offer of 32.1 per cent of the company was oversubscribed despite some earlier concerns about growth prospects.

Australasian institutions and New Zealand brokers were allocated a set $30 million of shares, ABN Amro Craigs said.

Another $15 million was set aside for Oyster Bay shareholders, Delegat's noteholders and the public. Not all Oyster Bay shareholders and Delegat's noteholders applied but those who did got what they asked for.

But allocations of shares going to members of the public were being scaled back, although figures on this were not expected to be available last night.

ABN Amro Craigs would not disclose the breakdown of allocations from the $15 million section of the offer. It said all were to be treated equally from now on so these figures would not be released.

The firm's investor banking director, James Beale, said the demand for shares and the dollar's recent drop could mean exporter Delegat's is well traded on Friday and at more than $1.40.

He acknowledged that it could be in a lead manager's interests to talk up share prices but said he genuinely believed the stock could go higher than $1.40.

He noted most brokers had wanted more stock than was available to them.

ASB Securities analyst Stephen Wright said: "I'd expect there to be a small premium - let's just wait and see."

The issue had been well received but it was possible that any general decline in the market could reduce any expected premium.

"Market conditions will also play their part at the time of listing," Wright said.

Beale described the fall in the New Zealand dollar as one of the "little tailwinds" Delegat's had experienced since setting the price at $1.40.

The drop could add up to $4 million to the targeted $13.8 million net profit next financial year for the export-oriented company.

The $13.8 million 2007 earnings forecast was based on January expectations of forward currency conversion rates that included US66.6c to the dollar compared with about 62.5c now.

"That $4 million ... is effectively the difference between those rates and where the rates stand now," Beale said. "So if those rates carry on forward, there's an extra $4 million or so of [net profit after tax] that can drop through to the bottom line."

On longer-term prospects, ASB's Wright said Delegat's was doing well in Britain and had good potential in the United States.

But no one could control the weather. "There are always risks and climate is one of their big ones."

Ongoing potential for help from a lower dollar will be good news for cornerstone shareholders Jim Delegat, Rose Delegat and Robert Wilton.

They took the unusual step of offering a sweetener of up to $22 million from their own pockets if prospectus targets were not met.

Should next year's net profit fall short of $13.8 million, they agreed to cancel some of their shares to boost the equity level of new shareholders.

[rmbbrave]

On opening day it closed at 1.55 up 10%

[Footsie]

nobody seems to care RMB...
sometimes this is a good thing.... but one thing is fore sure, Wine is no longer a sexy stock like it used to be in the days of montana

it will be interesting to see how it goes in a few months if the NZD stages a rally.

[Snow Leopard]

Admit that I have an interest in this one, so I am happy to see it above the issue price, but still in the realms of reasonableness.
The target NPAT for next year seems to be a stretch on the face of it, but the share cancellation condition actually acts to support the P/E beautifully should there be a shortfall.

Cheers

[Snow Leopard]

Fisher Funds have upped the stake up they control by 1% to 6.3%, paying an average of $1.605 since listing.
I wonder if they are still buying now the SP is over $1.70?

[Snow Leopard]

Now why as this risen 15 to $2.00 today?

You would have thought all the talk of the great australian wine glut would put a damper on the share price.

[Paddie]

quote:Originally posted by Paper Tiger

Now why as this risen 15 to $2.00 today?

You would have thought all the talk of the great australian wine glut would put a damper on the share price.


Paper Tiger,

Shame on you for not knowing the reason for the rise!

Warehouse Extra at Sylvia Park was selling their Hawkes Bay chardonnay for half price, the volume that they must have moved, look what it did to the traffic. They were all chardonnay drinkers causing the traffic congestion.

Paddie[:p][:p][:p][:p]:D:D

[Zaphod]

quote:Originally posted by Paddie
Paper Tiger,

Shame on you for not knowing the reason for the rise!

Warehouse Extra at Sylvia Park was selling their Hawkes Bay chardonnay for half price, the volume that they must have moved, look what it did to the traffic. They were all chardonnay drinkers causing the traffic congestion.

Paddie[:p][:p][:p][:p]:D:D


Chardonnay drinkers who also buy $50 TV's en mass - Interesting ascertion! [:p]

[Snow Leopard]

So the FY comes in ahead of forecast (of course ;)) and things are looking good for the future.
By making premium wines and ensuring good demand they have escaped the current wine glut price slashing competition.

I wish I could afford to drink the stuff but the divvy is only 1.6cps [V]

[KJ]

Good prospects concentrating on the premium end of the market with currency helping as they move forward.Budgeting to increase sales by 50% in 2007 and NPAT to $13.8m-2006 grape harvest very good so looking good.

[soltrader]

This stock is looking good, considering NZD is strong at the moment.

[Silverlight]

Wow no posts in 4 years, is there another thread?


Anyway From half year

Asssts 379m
Biologilcal 56m
Liabilities 206m

NTA including bilogical 1.6377, very close to current price.

Half year revenues up 7%, although net profit was down.

EPS 13.19 cps (8%) and 8 cent divdend, will be interesting to see the results due out by next Tuesday.

If profit is higher than the 30m for 09 this would be a very good entry point, considering its trading at underlying value.

[Robomo]

Well, its another 4 years since the last post on this thread. Last sale $4.50, up from $4.27 this morning. 8 Buyers for 27,000 shares. No sellers.

What's going on? The Annual Report showed steady growth and 1c increase in Dividend to 11c. Nothing startling so why the big price increase?

[Casa del Energia]

Well, its another 4 years since the last post on this thread. Last sale $4.50, up from $4.27 this morning. 8 Buyers for 27,000 shares. No sellers.

What's going on? The Annual Report showed steady growth and 1c increase in Dividend to 11c. Nothing startling so why the big price increase?

No idea - I came to this thread looking for an answer myself. I did hear on the news this morning that they are making a big push into the states - vary positive - but not +23c positive.

wonder if I should sell - the yield is only a bit over 3% now.

There is a 'DGL' thread but that hasn't been touched for years either.

[Robomo]

No idea - I came to this thread looking for an answer myself. I did hear on the news this morning that they are making a big push into the states - vary positive - but not +23c positive.

wonder if I should sell - the yield is only a bit over 3% now.

There is a 'DGL' thread but that hasn't been touched for years either.

I did go to the AGM last year and the strong message was that DGL is very much a growth stock with the aim of steadily increasing vineyard ownership and continuing to promote their wines as 'Super Premium', particularly in USA. I do recall a commentator saying about 3 - 4 years ago that Delegats consistently under-promised and over-delivered (unlike the unbelievably great promises and under-deliveries from others such as RAK).

I bought at the IPO at $1.40 plus some reasonable dividends since then so I'm very happy with 300+% increase in 9 years with every reason to expect continuing improvement in SP. 11c divvy on $1.40 is 8% so good return on that basis.

I'm holding.

[Casa del Energia]

I did go to the AGM last year and the strong message was that DGL is very much a growth stock with the aim of steadily increasing vineyard ownership and continuing to promote their wines as 'Super Premium', particularly in USA. I do recall a commentator saying about 3 - 4 years ago that Delegats consistently under-promised and over-delivered (unlike the unbelievably great promises and under-deliveries from others such as RAK).

I bought at the IPO at $1.40 plus some reasonable dividends since then so I'm very happy with 300+% increase in 9 years with every reason to expect continuing improvement in SP. 11c divvy on $1.40 is 8% so good return on that basis.

I'm holding.

Seems you are on the right. – just as suddenly realisation of DGL potential. For a time this morning, there were no offers – very tightly held. Lowest offer now is 455, so it may still head north.
I bought in at $2.38 and was feeling quite smug about it. $1.40 is totally superb.

I am holding as well – a big part of that is so hard to find an avenue to invest in NZ ag.
You can imagine how narked I was to be taken out of Montana. Don’t want to happen again.