October 2015
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The Waimahia Way Page 20
Crunch time looming for Silver Fern Hugh de Lacy Concerns have been raised that the country’s biggest meat company, Otago-based Silver Fern Farms (SFF), could be in receivership by the end of October if its shareholders turn down a 50% buy-in offer from Shanghai Maling. That’s the opinion of former Lincoln University professor Keith Woodford on an offer that has been unanimously endorsed by SFF’s board. Shareholders are due to meet mid-month to decide whether to accept $261 million from Shanghai Maling, which is 38% owned by China’s biggest meat company, Bright Food Group, for a half-share in the co-operative. It’s an offer that Woodford describes as “generous” in the debate over whether SFF should accept the offer, or, as proposed by the lobby group Meat Industry Excellence (MIE), it should forge an
amalgamation with the other big local meat-industry co-operative, Alliance Group. Woodford told Business North that the Shanghai Maling offer “has exceeded most people’s expectations”. He said that the report on the proposed deal by consultant Grant Samuels pointed out that “if the proposal isn’t accepted there’s a good chance – not a certainty, but a good chance – SFF will be in receivership by the end of [October]. “They haven’t got the capital to continue without their banks’ support,” Woodford said. “SFF has been surviving for the last two years only at the pleasure of their banking consortium, and [it] is not at all enthusiastic about continuing. “There are at least two of the four banks who do not want an on-going involvement. “What [the banks] have said if this passed at the [shareholders’] meeting is that they will support SFF through the transitional period until they get OIO
(Overseas Investment Office) approval, assuming it comes through. “But it’s pretty clear that SFF, in its present structure, does not have the support of its banks to continue,” Woodford said. The alternative of a merger between SFF and Alliance, long mooted by MIE and its predecessor, Meat Industry Advisory Group, was “highly unlikely to ever happen,” he said. The industry’s main problems were overcapacity in the processing sector and undercapitalisation. “From what I saw, the numbers never stacked up for an amalgamation of the two co-operatives, and I couldn’t see any banks were ever going to fund it.” He said he sympathised with the outcome that the lobby groups were seeking – “which was a stronger, more vibrant industry” – but history had shown such amalgamations were “very difficult to bring about.”
Woodford cited the early 1990s takeover by SFF, then known as PPCS, of the large privately-owned Hawke’s Bay company, Richmond Meats. “Essentially it didn’t work because having brought the two companies together, they actually ended up losing overall market share, so the combined company ended up quite a lot smaller than the two original companies. “[That] led directly to SFF having too much debt.” Alliance had a similar experience much earlier when it took over parts of New Zealand Refrigerating. “It’s really bringing together different cultures”, Woodford said. SFF’s current low levels of debt were the result of cleaning out its inventory, and it would still need between $330 million and $400 million in bank credit to get through the current season, Woodford said.
Hahei Beach to remain in Kiwi hands Chris Hutching Well known Hahei Holiday Resort has been acquired million by New Zealand-based investors for $13.5 million. They plan to keep operating it as a holiday resort. It comprises 6.79ha of land and buildings behind the beach at Hahei on the Coromandel Peninsula. Vaughan Magnusson is a spokesperson for the purchasers who have owned the Opoutere campground in the Coromandel for 10 years. He says his group’s vision for Hahei is for it to continue to be run as a Kiwi family holiday resort. “We want people to enjoy the camping they have loved here for years, and to encourage people to see that there’s more to the resort than camping: there are villas, studios and apartments here too, so you don’t have to be in a tent to enjoy Hahei. “Most importantly, we want to ensure that customers know that all bookings made to date will be honoured, and that we are open for business as usual. I would encourage anyone looking to book to do so quickly, to make sure they don’t miss out.” One of the previous owners, Ian Carter, says that it is great news for the Carter-Harsant family that the resort will keep operating. “Our family feels truly privileged to have run such a special resort for so long, and we know how strongly connected people are to this wonderful place.”
INSIDE
Rooms with a view.... Central Auckland looks spectacular from the new Hopetoun Residences apartment complex in Freemans Bay. Hopetoun is the latest project to be completed by developer Tawera Group as Auckland’s apartment market shows no signs of slowing down. Tawera Group director David Mahoney says there is plenty of demand for the “right type of product”.
A2 Milk off takeover menu - PAGE 2
New premises for Smartfoods - PAGE 2
“Immigration levels are strong and there is not enough housing stock as through the global financial crisis very little was being built,” he says. Tawera Group has established its reputation constructing high quality apartment developments in the Auckland CBD and fringe areas. See story page 6
Advisors call for action - PAGE 2
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