Satara shares placed in another trading halt

Wednesday 1st December 2010

Shares in Satara Co-operative Group, the NZAX-listed kiwifruit grower, have been placed in trading halt for the second time in under a month, pending a material announcement from the company.

The cooperative first suspended its shares on November 8 after MAF Biosecurity discovered the Psa bacteria (Pseudomonas syringae pv actinidiae), or vine canker, at a kiwifruit orchard on the North Island. The disease has now been confirmed in 80 orchards, most of which are situated near Te Puke.

Last week Satara postponed a vote on a possible merger with fellow kiwifruit grower Eastpack Ltd. to form a wholly grower owner unit, as the companies renegotiate the price and deal structure in the wake of the Psa outbreak.

"Whilst both Satara and Eastpack continue to recognise the operational and strategic justification for the merger, the uncertainty around the potential impact of Psa has meant that the original price and deal structure are now under review," Satara said in a statement to the NZX at the time. "A renegotiated transaction may now be presented to shareholders for approval in early 2011."

The kiwifruit industry and the government are jointly funding a $50 million compensation package to manage Psa. The affected orchards make up less than 1% of the nation's $1.5 billion kiwifruit industry.

Satara said the bacteria has had a “minimal impact” on its crop, with three of its orchards testing positive for Psa, and it does not expect a “significant” affect on its supply.

The disease has been identified in kiwifruit for at least 25 years but has not previously been found in New Zealand.

Psa has caused significant damage to Italian kiwifruit production in recent years, but it is not yet known what effect it would have on the kiwifruit industry in New Zealand if its presence here was confirmed.

To date, no export restrictions have been placed on New Zealand grown kiwifruit themselves, but the movement of plant material into Australia and the US has been banned.

Earlier this month Biosecurity Minister David Carter told the press that one or more countries could use the outbreak as grounds to block kiwifruit imports.

Shares in Satara last traded at $1 on Sept. 10.

BusinessDesk.co.nz

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