Stake in Oyster Bay pays off handsomely

By Chris Hutching

Friday 16th July 2004

Real estate agent David Rankin is feeling pleased with his investment in Oyster Bay Vineyards as the company prepares to pay out its first dividend that will be above the prospectus forecasts at no less than 13c a share.

With an eye on the underlying land values of Oyster Bay's Marlborough grape-growing blocks, Rankin began buying the shares in 2001 when they were $1.50 and he kept on buying them at various times since.

In recent trades the shares have changed hands for $2.70.

Oyster Bay is a Marlborough land-owning grape producer one-third owned by New Zealand's fourth-largest wine producer, Delegats, which makes the wine and labels it under the Oyster Bay label.

With 455,192 or 5.05% of the shares on issue, Rankin is looking forward to a healthy boost to his bank account. He emerged as a substantial security holder a week ago after he bought his last tranche of shares which lifted him over the 5% threshold.

Oyster Bay's grape-growing land was last valued three years ago and a new valuation is due out soon, when the company posts its annual result. Directors are also expected to announce a dividend of no less than 13c a share.

This figure is based on information contained in a recent prospectus from cornerstone shareholder Delegats seeking $35 million in an unsecured capital notes offer forecast to return 9.75%, to fund expansion of its operations and precede a possible listing on the stock exchange main board next year. The offer closes on July 23 but Delegats may launch another $40 million offer next year.

Rankin reckons his 5% equates to ownership of about 27ha of grape- growing land and the benefit of buying it as shares means he avoids any conflicts of interest in his job as real estate agent and valuer.

Of course, he's keen on Marlborough sauvignon blanc and being a shareholder means he has the opportunity to buy his tipple at favourable rates.

Delegats and its partly owned Oyster Bay vineyard now have a 390-ha site undulating from 1.4km frontage on Highway 63 alongside the Wairau River, New Zealand's largest single vineyard, ahead of Montana's Brancott Vineyard. In total, Delegats has about 1700ha planted in Marlborough and Hawke's Bay and its issue will help fund marketing and processing.

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