Barber’s Wire: SFF’s contract extension and changing conditions, make postponed shareholder meeting seem irrelevant

Allan Barber

Allan Barber comments on the latest two Silver Fern Farms media releases announcing a revised completion date for the contract with Shanghai Maling and a new date for the shareholder requisitioned meeting.

The revised date of 30 September for meeting the one remaining condition of the contract has been agreed in principle by both parties and is subject to agreement of both boards. Silver Fern Farm (SFF)’s chief executive Dean Hamilton said “We needed to allow more time to answer the further information requests from the Overseas Investment Office (OIO) and to then provide sufficient time for the OIO and then Ministers to consider the application. We continue to believe that the investment will be approved given its substantial merits.”

“The agreement to the new date reflects positively on the ongoing commitment of both parties to the transaction.”

The completion date for the contract will now be 4 January 2017, at which point Shanghai Maling will transfer the investment of $261 million. SFF’s current banking facilities run through until the end of October, while the banks have confirmed their willingness to extend their support provided the deal is still live.

The current season is proving to be more challenging than last season and profit will be down, as SFF chairman Rob Hewett warned earlier in the year. Trading conditions have changed significantly, with livestock prices at the same level as last year in spite of difficult trading conditions and a stronger than anticipated exchange rate.

The changing conditions make the shareholder requisitioned meeting, now set for 12 August, seem increasingly irrelevant and unnecessary. The company is totally confident its position is right and the vote at the meeting will not change anything at all.

Leader of the requisition group John Shrimpton appears to have changed his initial position where he expressed full support for the board and management to one where he is actively campaigning for a No vote. It is hard to see how he can claim not to want to disrupt and damage the company.

But he might have to have very deep pockets, if he wants to overturn the findings of the Financial Markets Authority (FMA) and Companies Office which found no fault with SFF’s communication process with shareholders.

Allan Barber is a meat industry commentator. He has his own blog Barber’s Meaty Issues and can be contacted by emailing him at allan@barberstrategic.co.nz.

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