Meat co-op seeks capital from farmer shareholders
Meat processor Alliance Group is asking farmer shareholders to inject more capital in order to remain a 100% co-operative.
Chairman Murray Taggart says the company is currently reviewing the request to ensure that it meets the necessary requirements before formally notifying shareholders.
“It is important to us that farmers feel they can have their say and this type of request is part of being a co-operative owned by farmers.”
“Once we have reviewed the request, we will work through the next steps and advise our shareholders.”
Taggart says that the shareholder meeting would be limited to a discussion and vote on the resolution as proposed.
The resolution proposed is:
‘That the Alliance Group Limited Board of Directors be required to provide all shareholders with a full analysis of the potential benefits and risks of Alliance Group Limited and Silver Fern Farms Limited merging into one co-operative entity, along with a comprehensive risk mitigation plan verified by an independent firm.’
“It is not a meeting to present and vote on the results of any cost/benefit and risk analysis.”
“Under the Companies Act, the resolution, if passed, would not be binding on the board,” says Taggart.
“It has been a difficult year for farmers and the board is working on a strategy to build a better business and improve returns for shareholders.”
“We have recently written to shareholders to update them on the board’s strategy and perspective on industry reform.”
“We need to build a business that is capable of paying our shareholders more at the farm gate and through profit distributions and we are starting a process that will transform the business and position us to respond to any business opportunities that may arise.”
Taggart says that Alliance group continues to look at various merger and acquisition opportunities. However, for any transaction to progress, it will need two willing parties who are profitable, have strong balance sheets and operating in a stable/growing business environment.
“While these requirements have not been met to date, we are continuing to explore worthwhile solutions that do not require equity injections from, or result in price reductions for, our shareholders or expose the company and farmers to unnecessary risk.”
“Mergers and acquisitions could be part of this but they are not in and of themselves enough to deliver farmers what they are looking for.”
“The company had examined in detail the costs and benefits of different consolidation options including proposals from MIE in their Pathways to Profit report,” says Taggart.
“We have met with MIE and are doing so again later this month. Based on the information we currently have, our view is that the size of the merger prize identified by MIE’s consultants GHD is unrealistic.”
Taggart says that the board’s strategy concentrates on six key priorities - market development, co-operative principles, securing farmer supply, lowering costs, improving safety and building capability.
