Silver Fern Farmers agree to open co-op to other investors

Friday 31st July 2009

Shareholders of Silver Fern Farms yesterday approved changes to the cooperative’s constitution that will open the door to other investors, create publicly traded shares and raise as much as $128 million.

The farmers who supply livestock to the cooperative voted 76% in favour of the proposals, the second time in the past 12 months they’ve agreed to cede some control in exchange for fresh equity. The farmers will retain 60% ownership of Silver Fern under the changes, with a new class of ordinary share that will trade on the Unlisted platform.

The cooperative now has the ability “to introduce a modern capital structure which not only protects the company but gives shareholders increased benefits,” chairman Eion Garden said.

Silver Fern’s farmers last year voted in favoru of the failed merger with PGG Wrightson, which would have generated $220 million in exchange for a 50% stake in the meat processor.

Under the latest proposal, Silver Fern’s rebate shares and investment shares will be exchanged for new ordinary shares and participating farmers would then be able to subscribe for two more shares at $1 apiece.

The issue price would be payable in cash or deducted from livestock payments for up to three years, the cooperative said.Shareholders could elect to acquire additional shares up to a cap of 5% it said.

Those that take up the offer would also be entitled to one bonus share for each four held.

Garden said Silver Fern opted for Unlisted rather than the NZX because the nation’s main exchange had “a lot more complications and regulations.”

The cooperative has bonds that trade on the NZX debt market which mature in December 2010 and won’t be replaced, he said.

The South Island meat processor will trim its board to eight from 12, with five directors including the chairman to be elected by farmers. The remaining three would be independents.

Under the proposed restructuring, farmers will retain 60% of the voting rights and other shareholders will be restricted to a 5% holding, Silver Fern said in a statement. Fresh equity would reduce debt funding requirements for Silver Fern.

Businesswire.co.nz

Comments from our readers

No comments yet