Western Gate was pleased to see a good performance from DIA's Spanish business in the Company's Q4 trading statement, released on 24 January 2025. Net sales grew by +5.4% and DIA captured additional market share in region. However, the fact that DIA's shares closed lower on Friday despite this positive performance, shows how much work still needs to be done to improve investor interest in the business.
Western Gate also notes Jonathan Muir's recent interview with Cinco Días, where the CEO of LetterOne discussed the challenges the investment firm has faced in making certain investments due to concerns from potential partners. This comes as no surprise. Good governance is essential in enhancing corporate reputations and minority investors have long challenged DIA's lack of transparency and communication with the market.
In his interview, Jonathan Muir stated that LetterOne has no intention of selling any of its stake in DIA, which starkly contradicts earlier comments from a member of DIA's investor relations team, who, during a call with analysts and investors, suggested that the majority shareholder was considering selling part of its holding to improve liquidity in the shares. The Coalition has long advocated for more liquidity and Western Gate is both surprised and concerned that this initiative, which would have benefitted all shareholders, appears to have been taken off the table.
Despite the positive news of DIA's recent refinancing, Western Gate cannot understand why the Company has agreed to such an expensive financing agreement with HPS Investment Partners, particularly in light of the significant improvement in DIA's operational and financial performance. The spread of 675bps is not only considerably more expensive than the previous syndicated loan, which was obtained during a period financial instability at the Company, but is also well above the rate agreed in comparable transactions.
Western Gate and the Coalition of minority shareholders in DIA are calling for better transparency at DIA and look forward to the management team providing greater detail regarding the recent refinancing, including the decision-making process, at the forthcoming Investor Day.
The Coalition remains committed to working with LetterOne and the Company to realize DIA's full market potential and ensure that all shareholder interests are properly represented, not just those of the largest shareholder.
Notes to editors:
About Western Gate
Western Gate Private Investments Limited is an investment branch belonging to the Family Office of Luis Amaral and invests in private and listed companies principally in the retail and consumer goods sector.
About the Coalition
The Coalition, led by Western Gate, is a group of independent shareholders, without any commitments on how to vote, who are seriously concerned about DIA's languishing share price and a lack of action from DIA's Board to address the fact that the Company is woefully undervalued vs. its peers. The Coalition is calling for the Board to act in the interests of all stakeholders and not just the majority shareholder by taking steps to better engage with the market and appoint an independent Board member with expertise directly relevant to DIA's business model, to represent minority shareholders.
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