Zespri shareholders back constitutional changes according to preliminary vote count
By Rebecca Howard
March 14 (BusinessDesk) - Zespri shareholders voted in favor of constitutional changes aimed at strengthening grower ownership and control of New Zealand's statutory kiwifruit exporter, according to preliminary results from a special meeting held today in Mt Maunganui.
Shareholders voted on a series of resolutions that will impose a cap on the number of shares they can hold relative to trays of kiwifruit produced, and phase out dividends for non-producing shareholders over seven years. Existing growers who stop producing after the vote would cease getting dividends after three years, according to information distributed prior to the meeting. The preliminary results show changes to Zespri’s constitution were backed by more than 75 percent of shareholders.
Chairman Peter McBride said the aim is to address a problem of growing misalignment between growers who supply kiwifruit to Zespri and people who own shares in Zespri.
“A significant number of New Zealand kiwifruit orchard owners do not own Zespri shares and over 18 million shares are held by people who have left the kiwifruit industry,” said McBride.
The vote comes after shareholders in 2015 approved plans to strengthen grower control amid concerns about an increasing misalignment between producers and shareholders. The changes required an amendment to the Kiwifruit Export Regulations last year.
Of Zespri's 120.7 million shares on issue, some 18.1 million are held by people no longer connected with the kiwifruit industry and a further 29 percent are held by producers at a ratio of below one share per tray, which Zespri deems "under-shared". At the other end of the spectrum, 8 percent of the shares are held by producers at a ratio of more than four shares per tray, known as "over-shared".
Zespri wants to aim for a ratio of one share for one tray produced but the new cap would set the limit at four shares per tray. Voting entitlements would be set at the lesser of one voting share per tray or the total number of shares the producer holds. The changes also take into account the rights of owners and lessees of kiwifruit orchards.
Another resolution addressed the misalignment of shares by giving Zespri the right to issue, buy back and distribute shares. This was also supported through a shareholder resolution and is planned for the second half of this year, Zespri said. It will be based on an independent valuation and target a share issue to unshared and under-shared growers, and a buyback offer to non-producers and over-shared shareholders.
"The changes will come into effect over a number of years, with a substantial transition period in place," said McBride.
Zespri shares last traded at $7.70 on the Unlisted platform, giving the company a market capitalisation of about $930 million. The stock will be halted on Wednesday and Thursday to allow Zespri to update its record of shareholdings.They began trading on Unlisted in early 2016 and have soared 340 percent since then.
The final voting results from the meeting will be confirmed by the close of business Thursday.
Kiwifruit is New Zealand's fastest-growing horticultural export and the Ministry for Primary Industries is forecasting more growth in the next two years, with exports to reach $1.8 billion in 2019. Zespri is aiming for $4.5 billion of global sales by 2025. In the next five years, the monopoly export authority plans to release 3,750 hectares of licences for its more profitable, sweeter SunGold variety.