Small growers join the tussle for Enza shares

By Chris Hutching

Friday 28th July 2000

Apple orchardists should receive information by mail on Monday about a share trust being set up to form a voting bloc on their behalf in the face of moves by Guinness Peat Guinness and FR Partners to seize control of marketer Enza with a bid at $1.50 a share.

Many apple growers and shareholders caught up in the corporate battle for listed statutory marketing monopolist Enza have belatedly woken up to the implications of changing ownership in their industry.

An apparent stand-off between GPG/FR Partners and Timaru-based businessman Allan Hubbard was resolved yesterday when the pair acquired Mr Hubbard's direct and indirect 8% shareholding in Enza.

The buy takes GPG/FRP to 11% each or 22%. They are offering to acquire up to 19.9% each of the company, the most, under the present constitution, that a single shareholder may own.

Both firms have said they will take seats on Enza's board.

Pipfruit Growers of New Zealand chairman Phil Alison said there had been plans afoot for several weeks to set up a shareholding owning trust to provide a voting bloc for growers. He said the majority of growers supported the Enza marketing monopoly and the security it provided bank lenders. He also believed the shares were worth more than $1.50 each.

But the success by GPG and FR Partners in buying 22% of Enza highlights dissatisfaction with the direction of the industry and the financial pressure many growers are under.

Mr Alison said the move to set up a voting trust, similar to the one Richmond farmers set up to counter the PPCS raid, was not aimed against GPG. But it would give growers a say depending on further moves by the key players in the action.

GPG has indicated it supports the retention of the monopoly and logically it would underpin the value of Enza shares.

Meanwhile, disquiet is growing in some camps that Enza has yet to release its financial results for the March year.

As the old Apple & Pear Board its results were normally issued within two months. Enza has said it will this year report a profit of "some millions" but the four-month wait has aroused suspicions there may be some "fish-hooks" in the financial statements or that the company is unable to agree with its auditors on accounting treatment.

Enza has come under fire for a string of dubious commercial decisions. In the past two years it has lost more than $11 million at the bottom line. In 1998 foreign exchange losses were $75 million and in 1999 they were $55 million.

The 1999 accounts show a further $28 million still to come. Any operating profit Enza announces for the latest year will be before expected one-off losses of $15 million from the disastrous Omniport investment.

Enza has copped criticism for selling the Frucor beverage operation too cheaply. It got $50 million from the 1998 sale while Frucor's recent market capitalisation following last month's Stock Exchange listing is around $250 million.

The Enza board has issued a "don't sell" notice and will make further recommendations when it obtains the results of an independent report by investment bank Grant Samuel on the fairness of the GPG bid.

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