25 NOVEMBER 2015

Silver Fern Farms ‘Heist’ Needs Regulators’ Scrutiny

New Zealand First is set to approach the regulators over what it believes are serious irregularities involving the sale of our largest meat exporter - Silver Fern Farms.

“If it walks like a duck, sounds like a duck and looks like a duck, the corporate agents behind the sale of Silver Fern Farms deal want shareholders to believe that it is something else,” says New Zealand First Leader and Member of Parliament for Northland Rt Hon Winston Peters.

“Silver Fern Farms books appear grossly understated and this raises big questions that the regulators must now examine. If they don’t, it could easily become a template for the breakup of Fonterra and other co-operatively owned companies.

“Shareholders were led to believe that on 16 September, just 14 days before Silver Ferns financial year end balance date, they had no alternative but to rely on a big Chinese offshore investor to stave off receivership.

“Even the ‘Independent Advisor’ Grant Samuel said as much in a notice sent out to all shareholders: ‘In the absence of such outcomes it is likely that SFF Co-Op may be faced with adverse consequences including receivership or liquidation’.

“That could not have been accurate because on November 9, barely three weeks after the ‘yes vote’ Silver Fern Farms announced a net profit after tax that was almost double what the directors had led shareholders to believe.

“Worse, we now know from the 30 September balance date that the co-op’s net debt was down to $121 million, yet Grant Samuel said year-end debt would be in the $140m-$175m range.

“Exactly what information, or lack of it, led him to that spurious conclusion.

“Ahead of the key shareholder vote on 16 October, shareholders were told in meeting after meeting that debt was much higher than what it really was.

“It is simply inconceivable that before the 9 November profit announcement, the directors, ‘Independent Advisor’ and advisory team, were all oblivious to this vastly improved statement of position.

“Finance Minister Bill English has stated the ‘commercial arrangements between the investors are not really the government’s business’. But, it is the government’s business if there’s uncertainty and enforcement agencies are not checking to see if the deal conforms to the Takeovers Act and the Companies Act.

“Shareholders voted in favour of an equal partnership but Shanghai Maling enjoys unequal dominance. That vote was only an ordinary resolution with a 67 per cent turnout, so how many farmers now realise they have both, sold half the company and the majority control for $57m?

“The much touted $261m investment is creative accounting at its most spurious, when the Chinese will ultimately hold all the levers of control over critical decisions.

“The regulators must now look closely to see whether Silver Fern Farm directors advised their shareholders properly or allowed the proverbial bull to be pulled over their farm owners’ eyes.”

ENDS

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