Alliance says shareholder proposal ‘unlikely to satisfy banks’

The meeting came days before Alliance shareholders vote on the $270m offer from Dawn Meats.

Alliance chair Mark Wynne confirmed to Rural News that they have had a discussion with representatives of the group.

“The details remain confidential but at first glance it looks unlikely to satisfy the banks’ requirements. There is a component of debt swap that makes it very challenging, especially for ongoing working capital and covenants.

“That said, under a "No" vote, we move into a whole new world of uncertainty and engagement with the banking syndicate. The board may not be in control of the process.

“The board still unanimously recommends supporting the Dawn proposal.” Dawn Meats proposes to buy 65% stake in the co-op.

The group of Alliance shareholders say they have secured options to keep the Alliance 100% NZ farmer-owned and are urging fellow shareholders to vote against the Dawn Meats deal. Earlier today, they called on the Alliance board to consider their proposals.

Read More:

• Farmers rally to keep Alliance Group 100% NZ-owned
• Dawn Meats lifts Alliance investment to $270 million
• Alliance farmer-shareholders urged to vote on $250m partnership with Dawn Meats

Their alternative plan involves capital contributions from shareholders, some considered asset-rationalisation and debt repayments via profits. Importantly, the plan makes use of the ability to offset $191 million of tax-losses against future profits, an opportunity which would be given away in a majority sale.

Group spokesman and former Meat and Wool NZ chair, Jeff Grant said Alliance has, over the past 18 months, worked through significant restructuring.

“On the back of this, we have achieved a massive turnaround and return to profitability. In this ‘non-peak’ year, AGL generated a profit of circa $20 million, a $90 million turnaround versus last year, and profit is projected at $75 million next year.

“The question farmers need to ask themselves before they vote is, why would we sell this critical asset at a time when red meat prices have never been better and global demand for our world-class protein is exploding?”

Alliance farmers will vote at a special general meeting in Invercargill on Monday.