Sunday 26th June 2016
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Silver Fern Farms will miss the June 30 deadline to satisfy conditions of the sale of a controlling stake in the country's largest meat processor to China's Shanghai Maling Aquarius but insists the deal hasn't been derailed.
The Dunedin-based meat company has also postponed a special meeting scheduled for July 11 for a second vote on the sale, which was requested by a group of dissident shareholders. It didn't give a new date for the meeting, saying it needed more time to supply information requested by the Overseas Investment Office.
“We continue to believe that we will achieve OIO approval, however we need to allow more time to provide the required information and then for the OIO and Ministers to have sufficient time to review,” said chief executive Dean Hamilton. "As a consequence of the anticipated extension, the July 11 special meeting has been deferred and a new date for the shareholder requisitioned meeting will be set to allow the notice of meeting to be updated and distributed to shareholders with adequate time to review."
Next month's special meeting was requested by shareholders opposed to the sale, who say an ordinary resolution voted in favour of the sale last October wasn't valid because as a major transaction a special resolution was required. They also say shareholders were effectively under duress because the board had warned the alternative could be receivership and there was no guarantee of continued support from its banks.
They also say the board withheld financial forecasts that showed a more optimistic outlook for the company. The Financial Markets Authority last month cleared Silver Fern after investigating a complaint about its disclosures related to the deal.
"The reality is that Shanghai Maling and SFF agreed last year that their documentation would expire if the proposed sale was not completed by 30 June," said John Shrimpton, a spokesman for the dissident shareholders. "Given it has been reported that the OIO is awaiting a reply from Shanghai Maling and that no extension was mutually agreed with SFF by the end of last week, I wouldn’t be surprised if the documentation is left to quietly lapse."
The OIO stopped work on the application weeks ago, and said late last week that it was awaiting further information from Shanghai Pengxin. Land Information and Associate Finance Ministers Louise Upston and Paula Bennett would then be required to make a final decision. The pair turned down an application last year by Chinese investor Shanghai Pengxin to buy the iconic Lochinver Station, a central North Island property.
"The OIO is still awaiting information that will enable it to complete its assessment of the application," a spokesman told BusinessDesk on Friday. "Therefore we can’t give an indication yet of when the application will be sent to the relevant ministers for a decision."
The OIO ‘stops the clock’ on its approval process when it asks an applicant for more information. Regular timetable blowouts caused by applications generating numerous information requests have led to complaints from foreign investors and their New Zealand advisers.
Shanghai Maling is 38 percent-owned by Bright Foods, which has a 39 percent stake in Canterbury-based Synlait Milk. The Chinese investor has bid for 50 percent of Silver Fern Farms in a deal that would give it effective control of the company through the use of casting vote powers on key issues.
The OIO received the application from Shanghai Maling on Oct. 16 last year and accepted it for assessment on Oct. 23.
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