SFF joins the slaughter
Meat processor and exporter Silver Fern Farms Ltd has joined fellow South Island-based meat company Alliance Group in reporting a big loss for the past year.
He believes Silver Fern Farms needs to investigate whether a $100 million in savings from consolidation projected by a Meat Industry Excellence report is an option before going down the foreign investment track.
By raising the support of 5% of the shareholders Richardson has forced a special meeting to consider whether the board should fully investigate a potential merger with Alliance Group.
Alliance shareholders Jeff Grant and Gaye Cowie are working to reach the same 5% threshold in Alliance, to also trigger a special meeting to consider the same resolution.
The resolution asks for an analysis of potential benefits and risks of a Silver Fern Farms and Alliance merger into one cooperative entity, along with a risk mitigation plan verified by an independent firm.
“There are projected $100m savings in the latest Meat Industry Excellence [plan] and the board is looking for $100m capital,” he says. “You would think they would examine that first before going down the foreign capital track. Instead of making foreign capital the first option, let’s make it the last one.”
Richardson claims he does not oppose foreign capital in principle, but is concerned about implications for ownership down the track. “We’re not talking a full merger here; in the current cultures that wouldn’t work. But there are areas where the two companies can work together.”
The sheep industry is in rapid decline and hasn’t got too much freeboard left, Richardson says. Decisions are needed to turn the company and the industry around. “If we get it wrong the implications are far reaching,” he says.
Since 2008 both companies have talked but there has only been “one willing dance partner” at any one time. “There will be two companies at the dance now.”
