Keith Cooper. Photo / Simon Baker
Meat processor co-operative Silver Fern Farms has ended an agreement to sell half of itself to rural services business PGG Wrightson.
NZX-listed PGG Wrightson agreed in June to buy half of the co-operative for $220 million, through a mixture of capital raising and debt.
Silver Fern shareholders approved
the deal and PGG Wrightson was due to pay $145 million in September and $75 million by March.
However, PGG Wrightson could not finalise bank credits, blaming extreme financial market conditions.
Silver Fern Farms yesterday said it had no alternative but to terminate the agreement, after continuous discussion and an inability by PGG Wrightson to deliver any level of certainty as to a possible settlement date.
Chief executive Keith Cooper said the termination was a necessary step to provide certainty to shareholders and other stakeholders, including employees and suppliers.
"It enables us to move on and see whether any alternative arrangements between Silver Fern Farms and [PGG Wrightson] are feasible," Cooper said.
The Dunedin-based co-operative had not decided on the amount or form of compensation it would seek, he said.
PGG Wrightson last week said it was unlikely to be able to consummate the transaction in the current form within a timeframe acceptable to Silver Fern Farms.
The transaction had been part of a partnership arrangement, whereby the companies would work together to achieve higher returns for meat producers, PGG Wrightson said yesterday. Chairman Craig Norgate said the objective remained and discussions on the various options available would continue.
"These include different shareholding options and the potential to work together on procurement and other business functions," Norgate said.
The deal had been promoted as creating a plate-to-pasture supply chain and a platform for industry rationalisation.
It had been expected to generate annual short and long-term benefits of more than $60 million and up to $110 million respectively.
PGG Wrightson shares closed up 5c yesterday at $1.75.
