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Silver Fern sells, partially leases back Silverstream plant

Friday 18th July 2008

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Silver Fern Farms, the meat cooperative formerly known as PPCS, is selling and partially leasing back its Silverstream processing plant and will cut jobs as the number of sheep for slaughter dwindles.

Christchurch-based Scales Group agreed to acquire the site for its Polarcold Stores unit, which will operate the cold stores, Silver Fern said in a statement today. No price was given and the company didn't quantify job losses.

"We are also acutely aware of the fact that forecasts for sheep and lamb supply are showing that there will be as many as three million less sheep and lambs in the South Island next year alone," said chief executive Keith Cooper.

Silver Fern last month announced that PGG Wrightson had agreed to buy 50% stake in the company for NZ$220 million, boosting working capital and helping the meat cooperative pay back debt. The agreement needs approval from the 9,000 farmer suppliers that own the cooperative, which has been closing plants to slash costs and boost returns.

New Zealand freight on board returns per metric ton for lamb fell 6% in the year ended Sept. 30, 2007, according to Meat & Wool New Zealand Economic Service.

A plan to merge with rival meat processor Alliance Group faltered last September. Shares of Wrightson were unchanged at NZ$2.41.

By Jonathan Underhill

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