The appeal of meat company Silver Fern Farms' shares to outside shareholders other than farmers might be limited for a while reports Stuff. That is one of the views coming from the report of appraiser Grant Samuel and Associates on the $128 million capital raising, which includes a rights issue and a listing of the shares on the unregulated share exchange Unlisted. If farmer-suppliers vote for the plan, SFF will move from being a co-operative to something described as a "hybrid" co-operative, where the shares are tradeable among shareholders but farmer shareholders retain voting and board control and other shareholders have weaker voting rights. Grant Samuel says that under the new constitution current suppliers will have a significant degree of control through differential voting rights. "That will have negative implications for non-supplier shareholders who may view the control afforded to supplier shareholders as unattractive. "The attractiveness of Silver Fern Farms as an investment for non-supplier shareholders will largely be determined by the underlying performance of the company." Non-suppliers were unlikely to be buying until they were confident of liquidity in the shares. Grant Samuel said the new shares were likely to trade at a larger discount to the full underlying value than other listed shares because the majority of the shares would be held for the longer term by current supplier shareholders and because of the differential voting rights. Its report says that if 50% of farmer-suppliers take up the rights issue the number of shares in Silver Fern Farms will be 160 million with each share worth $1.70 each. If 100% take up the shares, SFF will have 240 million shares with each share worth $1.40. In the information pack supplied to farmer-suppliers, SFF said if farmers rejected the proposed restructure and capital raising the company would not have the ability to raise additional capital in the future from other investors.The board would be forced to look at alternatives to bring in equity and reduce debt and that included a search for international investors, which would be difficult at a time when investors were cautious and required "their pound of flesh".
Appeal of Silver Fern Farms shares may suffer
Rural News
Appeal of Silver Fern Farms shares may suffer
8th Jul 09, 9:59am
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