Rt Hon Winston Peters

New Zealand First Leader

Member of Parliament for Northland
22 JUNE 2016

Penny Finally Drops for Silver Fern Farms Shareholders

New Zealand First says the first Silver Fern Farms’ Special Resolution meeting held on the sale of our largest meat exporter to China’s Shanghai Maling, has finally seen the penny drop for its farmer-shareholders.

“At the Gore meeting last night, shareholders have cottoned onto how their co-op is being sold from right underneath their feet,” says New Zealand First Leader and Northland MP Rt Hon Winston Peters.

“The acid was apparently put on Silver Fern Farms’ Chairman, Rob Hewett, over how the co-op’s livestock processing divisions were split up months before the Chinese sale broke cover and after the shareholders’ information packs on the sale were sent to shareholders.

“It seems Mr Hewett didn’t fully explain why he’s the sole director of three Silver Fern Farms companies, all of which were formed on 18 September, 2015. That’s after shareholders were sent their voting information packs and well before the October 2015 vote.

“We’re not telling the media how to do its job, but surely some searching questions would seem the way forward. Instead, the business and rural media seem to be sucking down Silver Fern Farms’ messaging as if it’s Kool-Aid.

“Silver Fern Farms is not heroically indebted as its miraculous 2015 profit and debt reduction suggests. Based on 2015 throughput, its debt on a lamb equivalent basis is about 60 cents per lamb while at Fonterra, for example, debt is over $6 for every kilogram of milksolids.

“As for this so-called $261m investment by Shanghai Maling, that’s only a promise and it hangs on the formation of the new Joint Venture (JV). If the media read the September 2015 Notice, they’ll learn that $50 million is the only cash that’ll change hands before it’s formed.

“So for $50m, Shanghai Maling gets a $300m plus stake in Silver Fern Farms, control over all major business decisions and even the chair’s casting vote. That $261m may be put into the company to meet the commitment, but it could so easily be reversed straight out again.

“Farmers are now waking up to the reality they’ve being taken for mugs while the government doesn’t want to upset the Chinese Communist Party. So who is running New Zealand these days, is it Wellington or Beijing?” Mr Peters asked.

Special Resolution on the sale to Shanghai Maling as a Major Transaction:

The Special Meeting and Special Resolution will be held on Monday 11 July. The Companies Act 1993 (Section 129) stipulates that a company cannot enter into a “major transaction” unless it has been approved by a special resolution, or is contingent on approval by special resolution. In the case of Silver Fern Farms’ own constitution, a special resolution requires approval by "at least 75% of the votes of those holders of Ordinary Shares”. The October 2015 vote was only an Ordinary Resolution and it saw 55.219m shares out of 100.379m shares cast in favour of the sale. At 55% this was only a bare majority and well short of 75% required by law.

The three companies formed on 18 September 2015, of which Mr Rob Hewett is the sole director, are: SILVER FERN FARMS MANAGEMENT LIMITED (5808607); SILVER FERN FARMS HOLDINGS LIMITED (5808403) and SILVER FERN FARMS JOINT VENTURES LIMITED(5808667).

ENDS

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