SFF maintains merger for best

Silver Fern Farms chairman Rob Hewett (right) and chief executive Dean Hamilton. Photo by Gerard...
Silver Fern Farms chairman Rob Hewett (right) and chief executive Dean Hamilton. Photo by Gerard O'Brien.
Dunedin meat processor Silver Fern Farms is battening down the hatches as it prepares for the special meeting this afternoon to rehash its joint venture with Shanghai Maling.

The campaign to stop the deal has been led by John Shrimpton and Blair Gallagher. SFF chairman Rob Hewett has been highly critical of the actions by the two men and other disgruntled shareholders.

One of the crucial questions which needs to be resolved  is whether the transaction is regarded as a "major transaction" under the Companies Act 1993.

Messrs Shrimpton and Gallagher are urging shareholders to vote against the special resolution, which asked shareholders to approve the proposed partnership with Shanghai Maling.

In a statement opposing the resolution, they said many of the requisitioners voted in favour of the ordinary resolution put to shareholders in October.

But subsequent developments and analysis had convinced them the proposed transaction was not properly approved then, and how it had been pursued by the company overall had led them to conclude it was not in shareholders’ best interests and should not be approved now, the two men said.

SFF said the transaction remained in the best interests of the co-operative and its shareholders and the board intended to complete the transaction, irrespective of the outcome of the resolution, as it considered the co-operative was contractually bound to do so.

The co-operative turned down requests from the Otago Daily Times yesterday for an interview with chief executive Dean Hamilton.

A spokesman said he was too busy preparing for today’s meeting.

The spokesman did ask for a clarification to a story published in the ODT yesterday which quoted the sale to Lowe Corporation of two North Island plants.

The sale of the leathers plant, in Ahuriri, to Lowe was announced on the March 13, 2014.

Shannon’s was confirmed and announced on October 24, 2013.

The spokesman said the wrong impression was given by indicating the sales were this year and last year.

But a second request for an interview with Mr Hamilton to clear up misconceptions was denied.

He would be available to the media after today’s meeting.

Mr Hewett maintained in the notice of meeting the transaction was not a "major transaction" for SFF under the Companies Act 1993, nor the co-operative’s constitution.

A special resolution of shareholders was not required, he said.

"The board took professional advice from PricewaterhouseCoopers at the time. Independent expert Grant Samuel has since confirmed the view taken by the board."

Business advisers spoken to yesterday by the ODT said they regarded a major transaction as: "50% of assets of company, but can relate to wide range of transactions from acquisitions to mergers to debt".

And the Companies Act does say a company must not enter into a major transaction unless the transaction is approved by special resolution or contingent on approval by special resolution.

Further on, the Act refers to an agreement to acquire, dispose or have a charge over assets  which were more than half the value of the company’s assets before the agreement.

If the Shanghai Maling is a 50:50 joint venture, and nothing more, SFF directors may be in the clear.

SFF maintains it will not be bound by the decision of today’s meeting, and both SFF and Shanghai Maling are committed to completing the deal, subject to approval from the Overseas Investment Office.

New Zealand First leader  Winston Peters has led a campaign from Parliament to try to shift public opinion against the deal.

The ODT was told yesterday by a long-term shareholder and supplier to SFF that Mr Peters had "his finger right on the issues".

The shareholder said there was a generational split emerging about the deal.

Younger shareholders were in favour of the joint venture because they could see a higher payout for their lambs.

Older shareholders were  concerned they were not given  correct information when they voted in favour last year.

"There’s no doubt now this won’t benefit farmers. The last thing Shanghai Maling want is to pay more money to New Zealand farmers," said the shareholder, whom the ODT agreed not to name.

In an unrelated but pertinent matter, NZ First’s Land Transfer (Foreign Ownership of Land Register) Amendment Bill was yesterday drawn from the ballot in Parliament.

Mr Peters said it was well past time for New Zealand to have a comprehensive database on the extent of foreign ownership of land and property.

The Bill is likely to receive support from all Opposition parties, leaving United Future and the Maori Party with the deciding votes.

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