21st Jan 2020 10:47
(Alliance News) - Portuguese investor Luis Amaral on Tuesday once again slammed the board of Stock Spirits Group PLC, demanding the firm pay a special dividend.
Western Gate Private Investments Ltd, which is owned by Amaral and holds 10% of Stock Spirits, previously has proposed a resolution for the drinks firm to pay a EUR0.1219 special dividend. Stock Spirits is holding its annual general meeting on February 6, when the resolution will be voted on.
Stock Spirits, by contrast, has proposed a final dividend of EUR0.0631 per share.
Stock Spirits does not have to pay the special dividend even if shareholders vote for it, the company has noted, adding such a payout would limit its ability to grow both organically and through acquisition.
However, Western Gate said Stock Spirits' cash conversion means leverage is at the bottom end of the firm's target, meaning it "clearly" has sufficient headroom to pay the special dividend.
The investment firm added: "Furthermore, given Stock Spirits' performance and after the payment of a special dividend, the company would still have EUR70 million available for new acquisitions. This demonstrates the company has comfortable headroom to reward shareholders and conduct meaningful M&A.
"Given the lack of meaningful progress in acquiring profitable assets since 2015, there is a case for the company to reward shareholders' patience and to re-set the capital structure. We believe the company should focus its capital allocation on shareholders, core markets, and products, rather than the current erratic acquisition track record."
Western Gate also has concerns over governance, saying it has found no evidence of a UK company ever saying it will not abide by a shareholder proposal no matter what the vote is.
Further, the investor has criticised director pay, saying remuneration at Stock Spirits has more than doubled since 2015, far ahead of peers such as Pernod Ricard SA, Brown-Forman Corp, and Berentzen-Gruppe AG.
"Western Gate is a long-term shareholder in Stock Spirits, and we are generally pleased with the improvement in the company's operational performance," it continued.
"However, for several years we have felt the company is being run in the best interest of the board rather than all shareholders. We are concerned with governance following the unprecedented response to resolution 20. We feel the board should recognise the lack of meaningful growth and the long-term nature of its acquisitions and return capital to shareholders".
Stock Spirits shares were flat on Tuesday morning in London at 215.00 pence each.
By George Collard; [email protected]
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