Alternate plan pushed for SFF

Sheepmeat prices collapsed in 2013. Photo / NZME.

Activist shareholders urge farmers to reject Shanghai Maling Aquarius deal in favour of their capital-raising proposal.

A group of Silver Fern Farms shareholders who oppose the company's proposed joint venture with Shanghai Maling Aquarius say their offer of a $90 million alternative capital raising proposal remains a live issue just days before the deal goes to the vote.

Activist shareholders in Dunedin-based Silver Fern Farms have urged farmers to vote against Shanghai Maling's offer to inject $261 million into the company, which would make it debt-free, so that the alternative proposal can be considered.

One of the shareholders behind the alternative capital raising, Clinton farmer John Cochrane, said the company was in better shape than many had understood, and that an alternative capital raising, through an underwritten rights issue, was a viable option. The Chinese joint venture goes to the vote on October 16.

Last month, South Island businessman John Rodwell said a number of agribusiness companies had clubbed together with an offer to underwrite a rights issue aimed at Silver Fern's farmer shareholders.

Rodwell told the Herald yesterday that the offer remained.

Supporting documentation surrounding the Shanghai Maling proposal pointed to a company firmly on the rebound after suffering the effects of a collapse in sheepmeat prices in 2013 and that it was making serious inroads into its debt.

"All this information is telling us that our company, Silver Fern Farms, is in a very sound operating financial position and had the shareholders been given this information in a more timely manner we could have made a more informed decision on whether there was an appetite from the shareholders to introduce the new capital that the banking syndicate are requiring," Cochrane said.

Cochrane said control of the company would be lost through the casting vote rights given to Shanghai Maling for the appointment of the chief executive, approval of the business plan, and approval of the budget.

The alternative offer was for the issue of 250 million new shares at a list price of 40c per share - the value weighted average price shares were last traded before the trading halt in late July.

All existing shareholders would be offered 2.5 new shares for each existing one they own. All new shares would have a stamped preferential status for five years, and derive a preferential dividend.

All shares not taken up from the shareholders would remain with the underwriters for five years upon which time they would convert to ordinary shares.

Silver Fern Farms is in the middle of a roadshow to sell farmers on the joint venture before the vote and chief executive Dean Hamilton said last month that the initial feedback had been positive.

Hamilton said he was confident that farmers would be in favour of the proposal.