Apple Fields puts ore before soil in latest investment deal

By Chris Hutching

Friday 5th April 2002

TOM KAIN: Not being replaced

Apple Fields founder shareholders Tom and Charles Kain are banking on a good year for minerals.

The former agribusiness entrepreneurs don't pretend to be geological experts but they are proving adept at mining the listed shell that is Apple Fields, bereft of assets and executives.

Tom Kain recently resigned the managing directorship as part of an ore refining deal with SABC of Adelaide and Titan Resources of Delaware.

The company this week revealed details of the plan shareholders believe will guarantee Apple Fields a sound income for the next two years and which will put it on a firm footing for the future.

The independent directors, Geoffrey Cone and Gordon Stewart, have renegotiated the deal they last year announced with SABC/Titan regarding a small mountain of ore in the Nevada desert.

Apple Fields will issue shares to Titan in exchange for precious metals refined to London Metal Exchange purity levels worth at least $NZ47,000 a month for two years.

The issue price is to be the greater of the prevailing share market price, as each tranche of metals is received, or 25c a share rising to 50c in the first year.

Other aspects of the deal include SABC subscribing for $450,000 in new capital to repay loan advances made by SABC recently to meet operational costs. The company will seek shareholder agreement to split the company with a new subsidiary holding property development joint ventures and headed by Tom Kain.

Embarking on the new metallurgical direction has paid wonders for the share price of the shell listing, which rose steadily throughout the latter months of 2001 to a high of 25c in February before settling back to 15c, the level at which the Kain brothers offloaded about $300,000 worth, reducing their stake from 48.5% to 42%.

This week the company had market capitalisation of $4 million at the latest price of 14c.

The value of the company's Stock Exchange listing is estimated at close to $1 million when everything is taken into account so investors trading at current levels are placing a premium on the share price on the promise of the future - whatever it may be.

The company will also look at other opportunities - or more accurately the company will negotiate other deals paid for by the issue of shares.

The Kain brothers founded the company in 1987 as an apple orchardist but over the past two years they have sold off properties at sufficient prices to pay back more than $70 million owed to the company's main funding vehicle - the Rural Super Bonds superannuation scheme.

The company defaulted on payments nearly three years ago to the bond scheme that was set up in 1993 to provide working capital and was secured over Apple Fields properties.

The trustee of the scheme, Tower Trust, placed some of the Apple Fields properties in receivership to more directly control the sale process but it was largely carried out by Apple Fields' executives, according to Tom Kain.

Investors have received all capital and interest owed to them including interest owed during the extra time they were locked into their investment.

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