Talleys tries again for bigger Affco stake

By LIAM DANN

Talleys Fisheries is hoping it's a case of second time lucky as it tries to increase its stake in meat company Affco from 26 to 42 per cent.

Talleys yesterday announced conditional agreements to buy Hugh Green Investments' 11 per cent stake in Affco and a 4.6 per cent stake from Dairy Meats.

Last year the Nelson-based frozen food company tried to buy the Hugh Green stake but was thwarted when Affco shareholder Peter Spencer - who owns 20.8 per cent through Toocooya Nominees - voted against the sale.

Affco shareholders will again be required to approve the sales.

Under the Takeovers Code Talleys would be required to make a general bid for at least 50 per cent of Affco unless the transactions are approved at a special meeting.

As parties to the transactions Talleys, Dairy Meats and Hugh Green will not be allowed to vote.

They will need the majority support of shareholders holding the remaining 57 per cent.

Spencer will again play a huge part in the outcome.

Talleys director Andrew Talley said he did not know if Spencer, who is believed to be overseas, had changed his stance but was optimistic that the purchase would be approved this time.

He said Affco's improved financial position made it a very different proposition.

"It's retired a bit of debt, raised some capital, returned to profitability and addressed its cost structure. So the circumstances are different to 12 months ago when the last one failed."

Affco made a profit of $10.8 million for the half-year to March 29 compared with a loss of $14.7 million for the same period last year.

There was no special reason for the timing of the proposed purchases other than that the shares had become available, Talley said.

The company has had a passive interest in increasing its stake for some time.

"We were happy to invest 12 months ago and we're happy now," he said. "There were reasons - probably valid reasons - why the shareholders didn't approve at the time. I think those have been addressed in the turnaround of the company."

Affco directors will make a recommendation to shareholders once an independent report on the transactions has been compiled. The proposed sale will be put to shareholders before the end of July.

Both share parcels would sell for 25c per share, compared with today's closing price of 19.8c.