Affco cleared to raise $27m

By PHILIPPA STEVENSON agriculture editor

Affco shareholders have cleared the meat company to raise $27 million critical to its recovery.

And the company has signalled it has put the worst of its problems behind it by appointing Tony Egan chief executive.

The appointment releases chairman Sam Lewis from the trouble-shooting managerial role he took 18 months ago after the shock departure of chief executive Ross Townshend.

Egan, 36, formerly managing director (marketing and finance) of the small Waikato beef processor Greenlea Premier Meats, has been Affco's chief operating officer since June last year.

At a 15-minute special meeting in Auckland yesterday - its brevity characteristic of the Lewis executive chairmanship - barely a dissenting voice was raised over resolutions likely to give major shareholders Talley's Fisheries and Peter Spencer's Toocooya Nominees effective control.

The two big shareholders had agreed to underwrite a rights issue designed to raise $27 million, but under the Takeovers Code the move required shareholder approval because of the likelihood that it would push their holdings above 20 per cent.

Talley's ownership could rise from 19.9 per cent to 35 and Toocooya's from 18.7 per cent to 25. The vote on the underwriting agreement passed unanimously and without discussion but mild opposition was voiced to the proposal to allow Talley's and Toocooya to acquire the rights of the fourth-largest shareholder, Dairy Meats.

A shareholder said Affco undoubtedly required the capital but questioned why the company had not already seen the benefit of previous financial rescue efforts and management changes. Results were meant to be evident this year, he said.

Affco reported a loss of $14.7 million for the half year to March. It said it needed the latest fundraising to reduce long-term, non-seasonal debt by at least $15 million and to pay $6 million for plant upgrades.

Lewis said the company had "turned the corner" in the last month and predicted that the second half-year result would be encouraging.

He said Affco had taken radical action in the past 18 months and now had a cost structure better suited to the cyclical nature of the industry.

After the meeting, deputy chairman Arthur Young, who represents Spencer on the board, said neither Spencer nor Talley's wanted to control Affco."We want to keep it publicly owned, New Zealand-owned and profitable."

Trading in the rights, issued at 10c a share, began on Monday and is due to close on September 27.

Talley's and Toocooya will pay 3c a share for Dairy Meats' 25.3 million share allotment.