SFF still backs Chinese deal

SFF has reacted sharply to recent media statements from shareholder John Cochrane suggesting there is an alternative funding arrangement waiting in the wings should shareholders turn down the Shanghai Maling partnership, with SFF chairman Rob Hewett saying it is a total unknown and should be treated with extreme caution.

Hamilton says the Shanghai Maling investment values Silver Fern Farms' equity at $311m. This equates to $2.84 per ordinary share, which has been assessed by experts Grant Samuel as being fair value. He is critical of the underwrite suggested by Cochrane.

"Raising $100m through a share offer at 40cps would require the company to issue 250 million new shares – that is 2.5x the number of shares on offer today. The sheer weight of issuing 250 million shares would mean the Silver Fern Farms share price would be destined to trade at $40c. This is a significant downside for shareholders when compared to the Shanghai Maling partnership."

"Pro-forma earnings per share under The Maling Partnership (28c per share) are almost twice that of Mr Cochrane's (15c per share). The dividend return under the underwrite will also be lower for existing ordinary shareholders given the 8.25% preferential dividend that will be paid to the underwriters.

"The underwrite suggestion would see shareholders having to put in $1.00 per existing share, whereas the Shanghai Maling partnership will see shareholders actually receive $0.30 per share as a special dividend.

"The Shanghai Maling Partnership will give us a unique opportunity in the China market, the resources to accelerate our global value added and through these initiatives create additional value for farmers."

"Mr Cochrane, and his colleagues Messrs Richardson, Shaw and Gardyne are asking shareholders to vote down a game-changing opportunity with a known party that has the unanimous support of the Board, in return for a speculative underwrite, with an unknown group of investors, at a price that is materially below fair value and that does not have a committed banking solution. Their 5 minutes to midnight suggestion creates significant risk to the company and to its shareholders."

"Shareholders should read the Notice of Meeting Information Pack and if needed seek independent financial advice."