THIS GRAPE PACKAGING specialist deserves some credit for being one of the few unlisted venture capital companies to publish audited results to shareholders in reasonable time. However, operationally, Vinguard – which manufactures sulphur dioxide gas-generating sheets – has been over a barrel for the past four years. In August 2004 Vinguard issued new shares in a much-hyped public, preferential and private offer at prices between 60c and 65c/share. At that point Vinguard carried an inferred valuation of around R60m – supported by prospectus forecasts of R17m in revenue and R1,7m in net profits for the year to end-June 2005.
But its annual report to end-June 2008 reflects nothing that could justify a R60m valuation. Vinguard posted a net loss of almost R1,7m from turnover of just R2,5m and its balance sheet screamed insolvency, with total liabilities exceeding total assets by more than R2m.
It was around that time packaging giant Mondi sold its 37% stake in Vinguard to John Daniel Holdings (JDH) – which already owned around 37% of the grape packaging specialist – for a nominal R1. Mondi’s willingness to “buck out” suggested Vinguard’s prospects were all but crushed.
Fortunately, parent company JDH – which itself raised R10m in new funding – rode to Vinguard’s rescue with a loan that allowed the company to settle creditors and get back into business.
Vinguard has been taking orders since October 2008, which will hopefully generate much-needed cash flow to service higher debt levels in its 2009 financial year.