KEY POINTS:
Silver Fern Farms is calling a compensation offer by PGG Wrightson for a failed deal to buy half of the meat processor co-operative unacceptable and antagonistic.
PGG Wrightson said it would provide $10 million against Silver Fern Farms' claim.
The listed rural services business said it did
not know the amount of damages sought by Silver Fern Farms but wanted a settlement based on delivering benefits that would have been achieved by the original deal.
Silver Fern Farms chief executive Keith Cooper said it was quite antagonistic to start playing negotiations out through the media "when at face value it appears it could quite likely end up in litigation before the courts, so it's a very surprising strategy to embark on".
"We've obviously been in discussions but to attempt to game us via the media is somewhat unusual," Cooper said.
Silver Fern Farms had not put a number on what it wanted, he said.
"Clearly the $10 million is grossly inadequate and totally unacceptable."
In June last year PGG Wrightson agreed to buy 50 per cent of Silver Fern Farms for $220 million in a deal promoted as creating a supply chain stretching from the pasture to the plate and a platform for industry rationalisation.
In September the company missed the first instalment of $145 million because it was unable to finalise bank credits in the economic climate and in November Dunedin-based Silver Fern Farms terminated the agreement.
The prospective short and long-term gains from the deal had been put at more than $60 million and up to $110 million a year respectively.
PGG Wrightson chairman Craig Norgate said the company had put forward a compelling proposal to achieve the objectives and provide redress for non-completion of the purchase.
"This is focused on future co-operation between the companies, particularly in procurement and other aspects of an integrated meat industry supply chain," Norgate said.
"We believe that our proposal will be of considerable value to [Silver Fern Farms] and its shareholders in regard to the long-term performance of the business.
"Importantly, the current shareholders of [Silver Fern Farms] would receive 100 per cent of the economic benefits generated by future co-operation rather than sharing half of them with [PGG Wrightson] as under the original partnership."
Norgate said the company had invited Silver Fern Farms to agree to formal mediation before a retired High Court judge.
PGG Wrightson shares closed down 5c yesterday at $1.20.
HOW DEAL SOURED
* PGG Wrightson could not complete a $220 million deal to buy half of meat processor Silver Fern Farms.
* PGG Wrightson says it is providing $10 million against a Silver Fern Farms claim and a proposal to achieve the objectives of the deal.
* Silver Fern Farms says the $10 million is unacceptable and negotiation via the media is antagonistic.
