OREANDA-NEWS. Western Gate Private Investments Limited ("Western Gate") confirms that yesterday it requisitioned proposals to remove Chris Heath, CEO of Stock Spirits Group plc ("Stock Spirits" or the "Company"), as a director of the Company. We have proposed that the Company employ an executive search firm to identify a suitable replacement. We have also nominated two new independent non-executive directors to stand for election to the Board of Stock Spirits and shareholders will be able to consider their appropriateness at the Company's AGM on 17th May 2016.

Western Gate is the largest individual shareholder in Stock Spirits holding an interest in 9.7% of the Company's outstanding share capital. We are a long term investor with a 10 year investment horizon and represent the private family office of Luis Amaral.

Before launching this requisition, Western Gate held a series of meetings and exchanges with the Company's executive and non-executive directors, including ahead of the outcome of the "detailed 'root and branch' review" of its Polish operations which was initiated following the Company's latest profit warning in November 2015. The findings of this review were announced on 10th March 2016 but we believe they contain nothing new to adequately address the most serious problem in its business - the dramatic loss of market share in the core Polish market and resulting decline in revenue. Our engagement with the Board, together with the outcome of the Company's wider strategic review, have left our very real concerns substantially unaddressed and indeed even raised further concerns regarding the Company's new M&A strategy. Hence, we have decided to bring the matter directly to shareholders for their consideration and look forward to communicating with our fellow shareholders in the weeks ahead.

Specifically, our concerns relate to:

1.   A 12.1% drop in market share2 from 38.4% at IPO3 to 26.3% as at December 2015, evidenced by a 33.5% decline in Polish revenue from FY13 to FY15 and resulting in the Company surrendering its market leading position in the Polish vodka market;

2.   An underperforming share price which at 148p1 has more than halved from the peak of 315p and is 37.1% below the listing price of 235p;

3.   Corporate costs spiralling up 111% since 2011, whilst revenues have declined 11% over the same period

4.   2015 corporate costs of €16.7m, which we believe are mainly comprised of the UK head office costs where the Company has no major revenue generating operations, equating to 31.2% of the Company's reported FY15 EBITDA;

5.   Executive management have continued to be very well rewarded notwithstanding poor underlying business performance; and

6.   A culture of "Group Think" at the Board level which has helped contribute to "Remote control management" from the UK and, as evidenced by the market share loss and share price fall, is not working and may have resulted in the loss of key regional leadership with 5 regional managers (across 3 regions) leaving the Company since IPO and no dedicated Polish CEO in place since January 2015.

We believe the executive management team have run out of ideas about how to stem the ongoing market share losses affecting the Polish business and the Board would benefit from added relevant experience, a fresh perspective and renewed energy.

After a thorough search process we are pleased to nominate two outstanding candidates who have been assessed by Heidrick & Struggles as strong, independent non-executive director candidates for Stock Spirits:

·     Alberto Da Ponte a veteran of the drinks industry for 25 years having run businesses for Heineken Group, Scottish and Newcastle, Unilever and Cadbury Schweppes

·     Randy Pankevicz has worked in the drinks industry for 25 years primarily at PepsiCo International and has held senior commercial, operational and financial positions across its Central and Eastern Europe divisions.

We will also be asking the Board to conduct a board level review of its recently revised M&A strategy and to undertake that no M&A be conducted without prior shareholder approval.

A letter from Western Gate which sets out the rationale for the proposals will be sent to the Company's shareholders, and is attached to this statement.

Luis Amaral said:

"Financial performance has been poor, market share has been lost in its core Polish market, salaries and costs are too high and remote control management of the business from the UK, where the Company has no major revenue generating operations, is clearly not working. The executive team consistently blames others instead of being on the ground in Poland addressing the local market dynamics and managing the business. A fresh perspective on the Board will benefit all stakeholders."