Sechaba likely to delist in protest - source

Sechaba Holdings Limited, the manufacturers of Chibuku and St. Louis lager, is ‘likely to delist’ from the local bourse this year, as a way of showing displeasure against government’s persistent increase of the Alcohol Levy.

A highly placed source in the market, with knowledge of the company’s operations and strategy told BG Business this week. 

“It will appear the board is fed up with the levy which has affected the company’s profitability in many ways,” said the source who did not want to be named, citing the ‘sensitivity’ of the matter.

The Botswana Stock Exchange (BSE) listed firm has in the last five years voiced concerns about the imposed levy- currently at 50 percent - which has affected the company’s volumes. 

“What is even worse is that the company, through their listing, is forced to declare some confidential matters even to the competition,” added the market analyst.
“De-listing is one way of showing that the company is not happy with government’s Alcohol Levy,” added the source. 

The controversial levy was introduced in 2008 (at an initial 30 percent), mainly to curb social problems associated with excessive alcohol drinking.  In the same year, Sechaba, under the leadership of Lehlohonolo Matsela, took government to court, arguing that the levy will affect profitability of the company.

The company later withdrew the application for undisclosed reasons. Strangely, government is also a shareholder in the company through the Botswana Development Corporation (BDC). 

In developments that will likely result with a formal application to delist from the local bourse, the company’s Managing Director Johan De Kok has revealed that they are “assessing the full impact of certain corporate change proposals”.

The assessment includes the company’s current benefits of listing on the BSE. With a market capitalisation of well over P2, 5 billion, Sechaba has one of the most liquid stock.

Meanwhile, Sechaba board Chairperson Edward Komanyane has quit the company under unclear circumstances. It was not clear if his resignation was linked to the tough regulatory environment the government has subjected the company to. Such regulation includes the Traditional Beer Regulation, which is negatively affecting the company’s opaque brew - Chibuku. In a related matter, the company has launched a special Chibuku that is sold in the South African market.

Meanwhile, the company’s profit before tax in the interim period from September, increased to P183, 4 million, as compared to P157 million the year before. De Kok said regulatory pressures are likely to dent their fortunes in the coming years.