Silver Fern to tap farmers for more cash, plans to trim size of board

Wednesday 1st July 2009

Silver Fern Farms, the meat cooperative that was the target of a failed investment proposal by PGG Wrightson, plans to tap its 20,000 shareholders for additional capital and convert their equity to a new, tradable class of ordinary stock.

At the same time the South Island meat processor will trim its board to eight from 12, with five directors including the chairman to be elected by farmers. The remaining three would be independents. Under the proposed restructuring, farmers will retain 60% of the voting rights and other shareholders will be restricted to a 5% holding, Silver Fern said in a statement.

Plans to raise funds come after rural services company Wrightson was unable to complete a deal to invest $220 million in Silver Fern in exchange for a 50% stake. Wrightson has since settled with the meat processor.

Under the proposal, which needs support of 75% of shareholders, Silver Fern’s rebate shares and investment shares would be exchanged for new ordinary shares and participating farmers would then be able to subscribe for two more shares at $1 apiece.

The issue price would be payable in cash or deducted from livestock payments for up to three years, the cooperative said.

Shareholders could elect to acquire additional shares up to a cap of 5% it said. Those that take up the offer would also be entitled to one bonus share for each four held. The new shares would trade on the Unlisted exchange platform, providing “a more transparent market-based share,” it said.

Fresh equity would reduce debt funding requirements for Silver Fern.

“We require further investment into initiatives that have a strong bias towards the consumer and the market, namely, market based supply contracts, processing and technological product development, and business partnerships that add value to non core activities,” chairman Eoin Garden said.

Company executives weren’t immediately available to give details of the fundraising target.

Silver Fern plans a series of meetings with farmer shareholders in the run up to a special meeting on July 30, where the proposals will be put to the vote.

Businesswire.co.nz

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