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#Cefour: Many question marks

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Cefour Wine & Beverage has released several press release so far this week, which left even more question marks. Management does at this point not respond to our inquiries which leaves an unfortunate aftertaste.

What has happened?

Cefour announced Monday that it is starting a closer co-operation with Shabacker Investment Group regarding advertising rights on disposable glasses for wine, water and juices.
The parties have signed a letter of intent which is supposed to lead to a written contract within a week. Shabacker Investment is supposed to receive the global licensing rights for advertising on Cefour’s glasses and their lids in exchange against “significant” investments to secure the sales division, marketing efforts and technical components for the machinery.

For Cefour, the deal would mean higher sales volumes plus continuous licensing fees.

At the same time, Cefour has come to the conclusion that this new deal will create value far exceeding current share price levels. This has caused them to terminate all discussions with the Croatian company that was preparing a bid for Cefour.

Then today, it was announced that Krönlein-Andersson & Co AB has converted its share loan into a sold position of 60m shares to Dejan Shabacker following Mr Shabacker acting on his buying option which both parties had which other (Krönlein and Shabacker that is).  Unfortunately, Mr Krönlein has never reported the existence of such an option which has caused Aktietorget to put the Cefour on the observation list.

Many questions

Recent developments have caused many question marks and so far, Nordic Investor has not succeeded to get any statement from the company:

  • Going from wine to wine, water and juices – what has caused this decision (new process, new prospects)?
  • From which date on will Cefour be producing and selling the new products?
  • What are the main end markets for the new products?
  • Is there a need for separate machines for wine, water and juices?
  • How big is the investment need?
  • What kind of volume increases can be expected?
  • When can we see the first results on the P&L?
  • Which potential do you see in the licensing rights? We know from a previous deal that one year in the Balkan region was sold for SEK 1m to Shabacker
  • Which leads directly to maybe one of the most important questions: what does Cefour need Shabacker for? Does Shabacker have any know-how, contacts in this business? The financing could have been sold by other means
  • What makes Shabacker better suited to sell the advertising space than Cefour itself?
  • Since when did Shabacker have the buy option on Krönlein?

Like Aktietorget, we put Cefour on a theoretical “observation” list. We like the concept, the product and the potential. However, recent events and management’s actions (or the lack of it) have caused us to frown.

Executed well, the new deal could mean big bucks for Cefour and its shareholders. A transparent plan could put a lid on all kinds of speculations.

Answers to our questions are eagerly awaited.

Nordic Investor

 

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