Alliance shareholders confident of forcing special meeting on merger benefits

Friday 3rd July 2015

Disgruntled Alliance Group shareholders say they hope to have the support from 5 percent of their number within the next 10 days that's required to force a special meeting to discuss the potential benefits and risks of a merger with Silver Fern Farms.

Last week Silver Fern Farms shareholders crossed the 5 percent threshold to force a special meeting of their meat cooperative to vote on seeking a full analysis of the benefits and risks of merging with Alliance, along with a comprehensive risk mitigation plan, verified by an independent firm.

Gay Cowie, a rural accountant and farmer who along with Balfour farmer Jeff Cowie pushed for the Alliance special meeting, said they’ve had good feedback from other shareholders in the past few days since launching the campaign. She wants to attract support from 5 percent of shareholders, or 3.5 million shares, within the next 10 days to two weeks, the same time period it took to force the Silver Fern Farms meeting.

“If it doesn’t stack up, it doesn’t but as shareholders we need to understand why. Farmers are ready for a change because it’s not looking very good for the future of the sheep meat industry. Our generation has to improve things for the next generation,” Cowie said.

Alliance has consistently said it can’t see benefit in merging with the debt laden SFF. As at the end of last year, SFF’s debt had been cut to $288.6 million from $387.6 million the previous year and it’s currently trying to raise $100 million of new capital.

Meat industry reform group Meat Industry Excellence (MIE), is still pushing its plan for a new export meat cooperative that would park the debts of the two big farmer owned cooperatives into a “bad bank”. The good equity would be put into a “good bank” and the two cooperatives merged into a new company.

Cowie said the meat companies can’t afford to stay stuck in the past and wants the Alliance board to state its long term strategy to shareholders and give them the opportunity to show support for an independent assessment of the business case for amalgamation.

Any votes made at either special meeting won’t be binding on the meat companies’ boards but Cowie said “they need to listen to what shareholders want.”

A date has yet to be set for the Silver Fern Farms special meeting and the company said today that the meeting won’t have any more information available to consider analysis or risk mitigation of the proposed merger.

“Only if the resolution is passed at the meeting and if the board elects to act on it, would the board then undertake and provide the further analysis sought, subject to the normal bounds of commercial confidentiality,” it said in a statement.

It also rejected claims by Otago farmer Allan Richardson who gathered the required votes for the meeting, that the board hadn’t yet investigated the potential gains of $100 million per annum tabled in MIE’s March report on industry restructure.

“The company has reviewed in detail, and done so a number of times, the costs and benefits of industry consolidation, including those related to a potential merger with Alliance. A merger requires the willing participation of all affected parties,” it said.

“While the costs and benefits of potential rationalisation opportunities can, and have been estimated, if the opportunities remain unconsummated then the analysis is moot,” the company said.

BusinessDesk.co.nz

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