Silver Fern Farms, New Zealand's largest meat processor, will hold a special meeting of shareholders on its planned tie up with China's Shanghai Maling Aquarius, despite saying it "is of no benefit" and risks being "disruptive" to the deal.
The meeting will be called after Silver Fern received a request from some of its farmer shareholders.
The Dunedin-based meat processor is preparing for the meeting in accordance with the Companies Act and the company's constitution after receiving a request from John Shrimpton and Blair Gallagher, representing a group of 80 shareholders, it said in a statement.A meeting between the board and Shrimpton scheduled for today was cancelled by Shrimpton late last week.
Silver Fern received approval in October from shareholders for the partnership with Shanghai Maling, which it expects will allow it to pay off debt and provide it with funds to upgrade plants and pursue its strategy of selling more, higher value branded products. Shrimpton believes the proposed deal wasn't properly approved by shareholders and has asked for the meeting to allow shareholders to reconsider it, the company said.
"The board considers that convening a meeting along the lines requisitioned is of no benefit to the company or its shareholders and is not an effective use of the company's management and financial resources," Silver Ferns said in its statement.
"It risks being disruptive to satisfaction of the remaining conditions to the investment by Shanghai Maling, to the relationship with Shanghai Maling, and ultimately to the company itself, our shareholders and shareholder value."
The Overseas Investment Office is assessing the application from Shanghai Maling which it received in October and expects to make a decision ahead of Shanghai Maling's June 30 deadline.
The deal involves Shanghai Maling Aquarius, a unit of China's state-owned Bright Food Group, taking 50 per cent ownership of the meat processor in return for $261 million of cash, a special dividend, and funds to bankroll the cooperative for seven years.
The New Zealand First party has been campaigning against the move, claiming last week that there was a shareholder revolt against the sale. The party last month lodged complaints about the proposed sale with the Financial Markets Authority and the Companies Office's Registries Integrity and Enforcement Team, claiming the meat processor had provided shareholders with misleading information on the state of the company's accounts and that the notice of meeting was structured so the deal was not deemed a significant transaction, lowering the level of shareholder support needed for it to be approved.
Silver Fern said it believed the investment by Shanghai Maling was approved by shareholders in compliance with all relevant laws, regulations and the company's constitution and it's legally bound to complete the investment once remaining conditions are satisfied.
The restructure of the company has already been completed and the only substantive step remaining once conditions are satisfied is for new shares to be issued, it said.