Meat processor Silver Fern Farms is working on replacement funding for an existing $75 million of bonds reports Business Day. The $75m tranche is due to mature in December and the meat processing co-operative is mulling options including a further bond issue or alternative funding from banks.

SFF had about $184.5m of debt at August 31. It needs capital or further facilities to help pay debt that is rolling over and to continue its farm-pasture-to-customer-plate marketing strategy. SFF’s previous capital-raising plan ended with a splutter rather than a surge with farmer suppliers only ploughing in about $22m of new equity, much less than originally envisaged.

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Silver Fern Farms is fighting for survival and is asking farmers for a hand. Will the hand hold a chequebook or a dagger? A vote today will provide the answer reports Stuff. The meat company wants its farmer-suppliers to invest up to $128 million, and to also agree to dilute their co-operative by allowing outsiders to own shares. It’s a big ask. Helping sway their minds is the promise of a considerable capital gain, expressed by analyst Bruce McKay as spending $2 to get $3.25. “A farmer would be mad or broke not to participate,” is his view. At stake is not only the company’s future prosperity but also the future of the meat industry. A stronger Silver Fern will mean a stronger industry.

At the heart of the plan to raise capital by creating tradeable shares is the need to reduce the company’s $189m debt. It follows three years of sweeping changes that have wiped $150m off debt. The company has also been rebranded and a strong push made for procurement contracts as part of a “plate to pasture” supply chain. More changes are to come, if the company can afford them, including carcass X-ray imaging technology in all of its plants. The X-rays will enable it to make lamb payments to farmers based on the size and quality of prime meat cuts. For the forward-thinking farmer this will be another incentive. Such a change will mean farmers who have invested in breeding sheep with the right meat traits will be rewarded.

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