Offering value despite tough year
A work in progress is how Farmlands chair Rob Hewett describes the rural trader's 2024 annual results.
His comments come ahead of a shareholder requisitioned special meeting.
The special meeting will be held at the meat processor's Dunedin office on August 12.
"In October 2015 shareholders approved our partnership with Shanghai Maling by an emphatic 82% of votes cast," Hewett said.
"If anything, the imperatives and potential benefits for Silver Fern Farms from this transaction have increased since then. Shanghai Maling's $261m investment for a 50% stake in Silver Fern Farms' business is clearly in the best interests of the cooperative.
"This investment will put Silver Fern Farms into a strong financial position, provide the capital to accelerate our 'Plate to Pasture' strategy globally and to invest in technology, equipment and improving plant efficiencies. Our business will also have a privileged position in China – the fastest growing market for red meat in the world."
Hewett said despite 82% of votes cast supporting the partnership, two shareholders John Shrimpton and Blair Gallagher want to stop the transaction from completing.
"We are frustrated and disappointed that Messrs Shrimpton and Gallagher have encouraged a small group of shareholders to question the approval obtained last year, that they have required the cooperative to hold this further special meeting, and that they are continuing to agitate for the transaction to fail.
"The allegations of Messrs Shrimpton and Gallagher have been strongly refuted by the board, and independent bodies have found no basis for them:
- The FMA has reviewed and found no issue with the 2015 special meeting.
- The registrar of companies has found no evidence that directors have acted in anything other than the best interests of the co-operative and its shareholders.
- Independent expert Grant Samuel has reaffirmed its view that the transaction is fair and reasonable to shareholders.
- Grant Samuel has also assessed the financial basis and confirmed the board's assessment that the Shanghai Maling transaction is not a major transaction for Silver Fern Farms.
"Subject to Overseas Investment Office approval, Silver Fern Farms is bound to complete the transaction with Shanghai Maling. This meeting – whether the resolution is passed or not – cannot change that.
"The Status quo is not an option. Our disappointing financial performance this year illustrates again the volatility of the industry and the risks associated with our current capital structure. We remain under lender pressure to address these issues."
