Jamie Gray is a business reporter for the NZ Herald

OIO considers data for Silver Fern proposal

Shanghai Maling has provided details the OIO required on the proposed Silver Fern Farms partnership. Photo / NZME
Shanghai Maling has provided details the OIO required on the proposed Silver Fern Farms partnership. Photo / NZME

The Overseas Investment Office says it has received the information it required from Silver Fern Farms' prospective joint venture partner, Shanghai Maling, and is considering its application.

The office had said previously it had delayed making a recommendation to the relevant ministers - Louise Upston and Paula Bennett - on the $261 million deal while it sought more information from Shanghai Maling.

"The OIO has received the information it required from the applicant and is currently considering its application," Annelies McClure, the OIO's group manager, said in a written reply to the Business Herald.

Meanwhile, a special meeting of Silver Fern Farms shareholders has been set down for Friday to look again at the controversial deal - which will see control of New Zealand's biggest meat processor pass to the Chinese company - even though management has said there is no turning back.

Silver Fern Farms chairman Rob Hewett has said the board remains unanimous in its view that the 50/50 partnership with Shanghai Maling is in the best interests of shareholders and the co-operative.

In October 2015, shareholders approved the partnership with Shanghai Maling with 82 per cent of votes cast in favour.

"If anything, the imperatives and potential benefits for Silver Fern Farms from this transaction have increased since then," Hewett has said.

The deal has encountered stiff opposition from a group of farmers, led by John Shrimpton and Blair Gallagher.

"We are frustrated and disappointed that Messrs Shrimpton and Gallagher have encouraged a small group of shareholders to question the approval obtained last year, that they have required the co-operative to hold this further special meeting, and that they are continuing to agitate for the transaction to fail," Hewett said in the notice.

Shrimpton is not your standard Canterbury high country farmer. He spent about 30 years in Asia - mostly in Vietnam - having co-founded Dragon Capital Group in 1994.

Just under nine years ago he bought the spectacular Glenthorne Station, in the upper Rakaia Gorge. He is also the second biggest shareholder in Silver Fern Farms.

The crux of opposing shareholders' argument is that company law requires 75 per cent of shareholders to approve a major transaction. Shrimpton and Gallagher say that while October's vote on the merger received 82 per cent approval from those who voted, not everyone voted.

Silver Fern Farms chairman Rob Hewett
Silver Fern Farms chairman Rob Hewett

On that basis, October's vote had only 50 per cent approval by the number of shares and 67 per cent by the number of shareholders. Shrimpton and Gallagher have said the deal should have been by way of a special resolution, requiring 75 per cent shareholder support, and not an ordinary resolution, requiring just 50 per cent support.

The transaction has also attracted the attention of New Zealand First leader Winston Peters, who has made a series of allegations surrounding the deal and the decision by shareholders last October to approve it.

The Financial Markets Authority reviewed the case and has found no issue with the 2015 special meeting.

The Registrar of Companies has also found no evidence that directors acted in anything other than the best interests of the co-operative and its shareholders. Independent experts Grant Samuel have reaffirmed their view that the transaction is fair and reasonable to shareholders.

The company has warned farmer shareholders that it now expects to only break-even in the current financial year, down from a pre-tax profit of $27.2 million in the previous year. It warned in April that profits would be "materially below" 2015.

Silver Fern Farms has cited its pressing debt load as a compelling reason for pressing ahead with the transaction. Its main bankers are Westpac, HSBC, Commonwealth Bank of Australia and Rabobank.

- NZ Herald

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