Silver Fern Farms, Shanghai Maling extend joint venture deadline

Silver Fern Farms. Photo / File

New Zealand's biggest meat processor and exporter, Silver Fern Farms, and China's Shanghai Maling have agreed in principle to extend the deadline for their joint venture proposal to September 30 after the first sunset clause lapsed this week.

The two parties said the date had been shifted to meet the only remaining condition - Overseas Investment Office (OIO) approval - for the $261 million deal to proceed.

A spokesman for OIO said last week that the office was not in a position to indicate when the Shanghai Maling application will be sent to the relevant Government ministers - Louise Upston and Paula Bennett - for a decision as it was still awaiting information.

Yesterday Silver Fern Farms chief executive Dean Hamilton said more time was needed to answer the further information requests from the OIO and to then provide sufficient time for the OIO and the ministers to consider the application.

Silver Fern Farms has cited its pressing debt load as a compelling reason for the controversial transaction, the validity of which has been challenged by a small group of farmers headed by Silver Fern Farms second biggest individual shareholder, John Shrimpton.

The company's main bankers are Westpac, HSBC, Commonwealth Bank of Australia, and Rabobank. A spokesman for the banks declined to comment to the Herald on the deal's postponement. A special meeting, instigated by Shrimpton and a group of dissident farmers, had been set for July 11 but has now been put off until August 12.

"Having been subject to various delays previously, shareholders will finally have the opportunity to vote on whether they wish to properly approve the proposed sale to Shanghai Maling, or not, before the OIO considers whether to grant its consent," Shrimpton said.

The group has complained that farmers were not armed with full information about the state of the company's finances before they voted to approve the sale last year. They argue that the deal should have been treated as a major transaction, thereby requiring a special resolution of shareholders in order for it to pass.

Silver Fern Farms has said the result of the meeting will not stop the transaction from going ahead.

Shrimpton and his group are pressing ahead. "We strongly believe that shareholders' interests are best served by retaining control and full ownership of our co-operative," he said.

Shrimpton, an Englishman, is not your standard Canterbury high country farmer. He spent about 30 years in Asia - mostly in Vietnam - having co-founded Dragon Capital Group in 1994. His corporate background is noted by the large international news and information company, Bloomberg. Just under nine years ago he bought the spectacular Glenthorne Station, in the upper Rakaia Gorge.

"At the time, I knew nothing about farming ... but I'm sort of getting there," he told the Herald this week. "My perspective is that of an institutional investor," he said. "I have had quite a bit of experience in corporate governance and its application."

Hamilton said Silver Fern Farms continues to believe the investment will be approved.

The parties have agreed to a completion date of January 4, 2017, to align with what will become the new balance date for Silver Fern Farms and the new financial year of Shanghai Maling.

At last year's meeting, 82.2 per cent of shareholders voted for the partnership with Shanghai Maling.