Farmers keep Richmond grip

HASTINGS - A small group of farmers battling to retain farmer control of their North Island meat processor has rolled the South Island meat giant Primary Producers Cooperative Society (PPCS) that has been trying to take over Richmond.

PPCS has been ordered to sell its 34 per cent shareholding in Richmond, worth about $22.4 million.

PPCS was alleged to have breached the Hawkes Bay-based Richmond company's constitution in the way it went about purchasing some of the shares acquired in its bid to take over the North Island company.

The PPCS takeover bid has been strongly resisted by the group of Hawkes Bay farmers fighting to retain local control of Richmond, to the extent of setting up their own holding company, Richhold, to aggregate the small lots of shares held by about 1700 Richmond farmers or employees through share swaps.

The order for PPCS to sell results from a legal challenge by Richhold to the way the southern company acquired some of its shareholding.

Richhold claimed that PPCS's acquisition of a one-third holding in Richmond's largest shareholder, HKM, in February 1999, was a breach of the company's constitution.

In 1997, PPCS unsuccessfully sought a 33.4 per cent stake in Richmond put up for sale by the Meat Board. After protests from Richmond, the Meat Board sold its shareholding to HKM Nominees, which at the time was described as a "Maori investment company."

Then, in February 1999, PPCS announced it had bought a one-third stake in HKM, with an option to take up another third.

An announcement by PPCS in August last year, that it wanted to buy 51 per cent of Richmond, alarmed Hawkes Bay farmers.

In January 2000, PPCS boosted its stake in HKM Nominees to 67 per cent. HKM had about 25.5 per cent of Richmond at the time, after its initial shareholding had been diluted by the issue of new shares.

At the same time, Richmond's chairman, local farmer Sam Robinson, was replaced by Auckland accountant Bob Croker.

Mr Croker had been appointed a director in his own right, after space was made on the board for him through the resignation of director Arama Kukutai, one of the three principals of HKM.

Mr Croker has said he acts as an independent chairman. Yesterday he said Richmond directors, after taking legal advice, had decided that the PPCS shares were "defaulter securities" because of the breach of clause 11.1 of the Richmond constitution, and should be sold.

- NZPA