Extension needed for Silver Fern Farms deal

Silver Fern will also seek to defer a fast-approaching July 11 special meeting called by dissident shareholders who oppose the deal. Photo / Brett Phibbs

Dunedin-based Silver Fern Farms and Chinese food group, Shanghai Maling Aquarius, are negotiating an extension to the June 30 deadline the companies put in place for the deal to achieve Overseas Investment Office (OIO) approval.

A spokesman for OIO said the office was not in a position to indicate when the Shanghai Maling application will be sent to the relevant Ministers for a decision. "The OIO is still awaiting information that will enable it to complete its assessment, so the ball is in the applicant's court," he said.

The deadline was imposed by the companies, not the OIO, he said.

Silver Fern will also seek to defer a fast-approaching July 11 special meeting called by dissident shareholders who oppose the deal. The Silver Fern Farms board said it would press on with the $261 million deal, which will pass effective control of New Zealand's biggest meat processor to the Chinese, regardless of the outcome of the special meeting.

"With more time required to meet information requests from the OIO, the parties are in the process of agreeing an extension to the June 30 date to meet the OIO approval condition," Silver Fern said in a statement.

"We continue to believe that we will achieve OIO approval, however we need to allow more time to provide the required information and then for the OIO and Ministers to have sufficient time to review," chief executive Dean Hamilton said in a statement.

"As a consequence of the anticipated extension, the July 11 special meeting has been deferred and a new date for the shareholder requisitioned meeting will be set to allow the notice of meeting to be updated and distributed to shareholders with adequate time to review," he said.

The deal was passed by shareholders last year, but a group shareholders led by Silver Fern Farms biggest shareholder, John Shrimpton, have taken issue with the legality of last year's vote.

Shrimpton said in a letter to shareholders the proposal to transfer 100 per cent of Silver Fern Farm's existing business into a joint venture that Shanghai Maling would control is, in terms of the Companies Act and the SFF's own constitution, a 'major transaction' which can only be approved by a special resolution of shareholders.

The board, however, has said it could even approve the sale of the entire business itself and that it does not constitute a major transaction.

Shrimpton also said shareholders were misled into thinking the company's financial position was worse than it was as they headed to the ballot box.

"Last year's vote also seems to have been induced by an effective threat that the cooperative was on the brink of receivership," he said.

"Three weeks after the vote, Silver Fern Farms eleased year end results revealing that it had in fact significantly reduced debt to levels rarely seen in the last 15 years and produced substantial profits, enabling the company to continue as a New Zealand farmer owned cooperative," he said.

"The notice we received didn't include forecasts of what would appear to be record earnings forecast for 2017 and 2018, or of how plant closures in that period would boost profits," he said.

Once completed, the OIO aplication will be put before Land Information and Associate Finance Ministers Louise Upston and Paula Bennett to make a make a final decision.

The pair turned down an application last year by Chinese investor Shanghai Pengxin to buy Lochinver Station, in the central North Island.

Shanghai Maling Aquarius is 38 per cent-owned by Bright Foods, which has a 39 per cent shareholding in Canterbury-based Synlait Milk.