NZ's biggest meat co- operative Silver Fern Farms is looking at creating a new class of shares as part of capital-raising options and governance revamp. This follows the failure of a $220 million merger with PGG Wrightson in which SFF would have enjoyed a $220m capital injection reports Business Day. Chief executive Keith Cooper said a possible new share structure would reduce the reliance on external funding sources, and facilitate a stronger relationship with the farmer owners. "The shareholding [structure] at present doesn't really do anything for the relationship between the shareholder and the company which they own . "We could move away from the dollar-in dollar-out [model] to a share that had moving values in accordance with the value of the business. We haven't got any more firm detail on that, but that's sort of the concept." There was no plan to open up SFF's ownership to the public at this stage, Cooper said. The co-operative's 75 million shares on issue could be increased and the class of shares changed. Farmers each owned a maximum of about $30,000 of shares in the Dunedin meat processing co-operative but could be given the opportunity to voluntarily increase those shareholdings, Cooper said. A special meeting of farmer owners in July or August would be needed to approve a change in the share structure. SFF has two classes of ordinary shares - rebate (with a maximum holding of 17,500 shares) and supplier investment (a maximum of 15,000 shares). Ordinary shares had a $1 face value. Under changes being considered, the farmers could upgrade their shareholdings, encouraged by the better "cashflows" they were receiving for meat, he said. Chairman Eoin Garden said on Friday that SFF was evaluating capital-raising options to ensure capital adequacy, reinvestment and to insulate it from potential risks associated with the credit crunch. A share issue to existing farmer shareholders had inherent benefits, including ensuring farmers retained control of the processing and marketing assets, Garden said. SFF was planning to launch the capital restructuring and governance review to shareholders in July. The capital- raising plan also reflected the deteriorated global financial scene, in which companies had to reduce debt or deleverage their business, Cooper said.
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