Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Dangerous game to stare down bankers, warns SFF chairman

Dangerous game to stare down bankers, warns SFF chairman


By Jonathan Underhill

Oct. 12 (BusinessDesk) - Silver Fern Farms chairman Rob Hewett says the company's banking syndicate has become tired of its relationship and it would be "a dangerous game" to test lender support in the event farmer-shareholders don't support selling a half stake to Shanghai Maling Aquarius this week.

Hewitt was responding to calls from shareholders opposed to the deal to look at alternative funding, which could keep New Zealand's biggest meat company in local hands. The cooperative that now owns SFF would be showered in cash if the Chinese deal goes ahead. As well as $261 million that would be injected into the business, leaving it debt free with funds to upgrade plant and pursue global growth ambitions, the farmers will get a dividend of 30 cents a share, or $35 million, and the cooperative's board would get $7 million for its costs - enough to keep it going for seven years at current rates.

SFF shareholder John Cochrane last week floated an alternative plan to raise $90 million in a rights issue underwritten by local agri-businesses, a strategy he claimed would cost the average farmer $25,000. But Hewitt said SFF didn't know who was backing Cochrane's plan or what control they would demand in the event farmers didn't take up all their rights to new shares.

"We would be entering a state of financial uncertainty in the event that this is voted down by shareholders," Hewitt said. "For John to suggest we stare the banks down - it's a dangerous game."

Hewitt said while SFF had made progress repaying debt and improving the performance of the meat company, "the challenge is we have a banking syndicate which is tired." The board agrees with lenders that the company needs to put some extra equity into the business "and we're not confident we will get that amount of equity from existing shareholders."

Former SFF director Richard Somerville, another opponent of the sale, issued a statement over the weekend urging farmers to reject the Shanghai Maling deal and not cede control of their company.

"PPCS (SFF’s previous name) was founded in an environment where UK interests dominated the NZ meat processing industry at a significant cost to NZ suppliers," Somerville said. "Why would you take the risks of moving from one colonial master to another?"

While Westpac Banking Corp and Rabobank are understood to be willing to continue to provide a debt facility to SFF, HSBC and Commonwealth Bank of Australia are said to be less keen.

"The call for acceptance of the Shanghai Maling offer is not driven by debt but by the desire by two of the banking syndicates wishing to exit their exposure to SFF," Somerville said. "We understand SFF has an offer from a reputable bank to provide a facility to rank alongside Westpac and Rabo and take out the one, or possibly two, banks wishing to exit and that this offer is conditional upon SFF raising new equity in the region of $80-$100 million." That would require farmers to support a rights issue, he said.

Hewitt said shareholders shouldn't be concerned that under the deal Shanghai Maling's co-chair will get a casting vote on governance issues, including the meat company's budget and appointment of the chief executive, saying the Chinese company had insisted on this for its own accounting requirements in China and the venture would be "a genuine partnership, straight down the middle."

He said if supplier shareholders were unhappy with the use of the casting vote, "they could withhold their livestock and then the company is worthless."

Hewitt also defended the $7 million Shanghai Maling would contribute to the cooperative's board for governance costs should the deal go ahead. The cooperative would still have a board of directors after the sale, although it wouldn't be overseeing the company in the same way, with just a 50 percent holding. He said the co-op board would still have costs including travel, running election processes every year and continuing with its governance development programmes. Based on the current board costs, the $7 million would keep the board operating for seven years.

Wednesday Oct. 14 is the last day shareholders can lodge proxies and internet votes ahead of the Oct. 16 special meeting in Dunedin.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

DIY Law: Government Exempts Some Home Improvements From Costly Consents

Homeowners, builders and DIYers will soon have an easier time making basic home improvements as the Government scraps the need for consents for low-risk building work such as sleep-outs, sheds and carports – allowing the construction sector ... More>>

ALSO:

Media Awards: The New Zealand Herald Named Newspaper Of The Year, Website Of The Year At Voyager Media Awards

The New Zealand Herald has been labelled a “powerhouse news operation” as it claims the two biggest prizes – Newspaper of the Year and Website of the Year – along with many individual awards at the 2020 Voyager Media Awards Website of the ... More>>

ALSO:

ASB Bank: ASB Takes The Lead Again With New Low Home Loan Interest Rate

ASB has moved again to support its customers, cutting a number of home loan rates, including the two-year special rate to a new low of 2.69% p.a. Craig Sims, ASB executive general manager Retail Banking says the reduced rate will be welcome news for many ... More>>

ALSO:

Nathan Hoturoa Gray: The Problems With Testing And Case Statistics For Covid-19

To begin to understand disease transmission in a country requires adequate testing of your population with properly vetted, accurate tests. As the world struggles to find what 'adequate percentage' of the population is necessary, (estimates predict ... More>>

ALSO:

RNZ: Fletcher Building To Lay Off 1000 Staff In New Zealand

The construction company will cut around 10 percent of its workforce as it struggles with the fallout from Covid-19. More>>

ALSO:

Can Pay, Won't Pay: Cashflow Moves Urged

Government Ministers are asking significant private enterprises to adopt prompt payment practices in line with the state sector, as a way to improve cashflow for small businesses. More>>

ALSO:

Gordon Campbell: On Why We Should Legally Protect The Right To Work From Home

For understandable reasons, the media messaging around Level Two has been all about “freedom” and “celebration”, but this is not necessarily going to be a universal experience. When it comes to workplace relations, Level Two is just as likely to ... More>>

ALSO:


Telecoms: Spark Welcomes Spectrum Allocation And Prepares For 5G Rollout Over The Next 12 Months

Spark welcomes spectrum allocation and prepares for 5G rollout over the next 12 months Spark today welcomed the announcement of the direct allocation process of 5G spectrum, with the Company to be offered management rights to 60 MHz of 3.5 GHz ... More>>

ALSO:


Trade: Record Monthly Surplus As Imports Dive

Imports in April 2020 had their biggest fall since October 2009, resulting in a monthly trade surplus of $1.3 billion, Stats NZ said today. “This is the largest monthly trade surplus on record and the annual goods trade deficit is the lowest ... More>>

ALSO:


Media Blues: Stuff Chief Executive Buys Company For $1

Stuff chief executive Sinead Boucher has purchased Stuff from its Australian owners Nine Entertainment for $1.
The chief executive was returning the company to New Zealand ownership, with the sale is expected to be completed by 31 May.
"Our plan is to transition the ownership of Stuff to give staff a direct stake in the business as shareholders," Boucher said in a statement.... More>>

ALSO:

RNZ: Bar Reopening Night 'much, Much Quieter'

Pubs and bars are reporting a sluggish first day back after the lockdown, with the fear of going out, or perhaps the joy of staying home, thought to be a reason for the low numbers. More>>

ALSO:

Stats NZ: New Zealand’s Population Passes 5 Million

New Zealand's resident population provisionally reached 5 million in March 2020, Stats NZ said today. More>>

NIWA: Seven Weeks Of Clearing The Air Provides Huge Benefits: Scientist

Seven weeks of lockdown has provided evidence of how pollution can vanish overnight with benefits for the environment and individuals, says NIWA air quality scientist Dr Ian Longley. Dr Longley has been monitoring air quality in Auckland, Wellington ... More>>

ALSO:

Government: Milestone In Cash Flow Support To SMEs

A significant package of tax reforms will be pushed through all stages in Parliament today to throw a cash flow lifeline to small businesses. More>>

ALSO:



University Of Canterbury: Astronomers Discover The Science Behind Star Bursts That Light Up The Sky

University of Canterbury (UC) astronomers are part of an international team that has revealed how explosions on the surface of a white dwarf star can increase its brightness by thousands or millions of times making it look like a new star. For ... More>>

Air NZ: Air New Zealand Adds Business-timed Flights For Regions

Air New Zealand will operate business-timed flights in and out of a number of regional ports from next month.
The flights will allow customers in Hamilton, Tauranga, Napier, New Plymouth, Palmerston North, Nelson, Dunedin and Invercargill to undertake a day of business in either Auckland, Wellington or Christchurch... More>>

ALSO: