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PPCS prepares to celebrate victory

By Chris Hutching

Friday 13th June 2003

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Dunedin-based PPCS chief executive Stuart Barnett is putting a confident face on the possible outcomes of an Appeal Court hearing next month that will determine whether it has majority voting control of listed meat processor Richmond.

Mr Barnett said while he expected to succeed in the appeal, even in a worst case scenario where the court upheld earlier forfeiture orders PPCS would retain its "economic interest" of 63% with voting control over 35% of Richmond shares. North Meats would have 22%, director Rod Pearce 7.7%, Nessock Custodians 5% and NZ Central Securities Depository 5%, with the balance held in smaller parcels.

The cost of the takeover and court actions continues to mount but Mr Barnett said PPCS wouldn't be paying more than the asset backing ($3.22 a share) of Richmond. The shares have been trading at about $3.14, just above the PPCS bid price of $3.11. Mr Barnett reiterated that the rationale in taking over Richmond is to become a bigger player when dealing with overseas buyers.

Over the past couple of weeks PPCS has held briefings for journalists and analysts and shown them around its Silverstream (ex-Fortex) plant near Dunedin to highlight the increased use of modern technology and marketing methods. The briefing complements the discussions that PPCS has been holding with North Island farmers supplying Richmond in efforts to assuage concerns they may have.

Visitors to Dunedin last week were shown two robots that can remove the aitch bone from lamb hindquarters. PPCS has exclusive rights on the technology for two years after which the joint venture that owns the intellectual property will market it elsewhere. Displaced staff will be employed in other areas.

Silverstream plant manager Michael Smith showed how PPCS has increased the number of cuts and the way finished product is packaged and branded for customers in the Middle East and Europe.

Like other meat processors, PPCS is trying to lift the amount of chilled and branded product that leaves the plant as opposed to generic frozen meat cuts. PPCS is above the industry average with about 18% of product in the chilled category

Mr Barnett also noted New Zealand had privileged access to European markets and it was arguable whether exporters would be better off under a more liberal international trade arrangement that would open up those markets to players from other countries.

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