Silver Fern Farms, the South Island meat cooperative transforming into a publicly traded company, raised a lower-than-expected $21 million from its rights offer, based on an initial count of subscriptions reports Scoop.

The rights were part of the meat processor’s offer for its farmer-suppliers to exchange their 57.5 million rebate and investment shares for new ordinary shares that will trade on the Unlisted platform. Holders of 38.8 million shares, 67.5% of those on issue, had participated in the exchange by the time it closed today. 

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Little more than a third of farmer shareholders in the Silver Fern Farms cooperative have taken up the new equity deal offered by the company in July as the deadline passed this evening. The company announced tonight it is extending the offer by three weeks to October 9, blaming a busy lambing season for the low uptake, and expressing satisfaction with progress so far reports Scoop.

A total of 13,000 transacting shareholders were eligible for the offer, accounting for 57.5 million Rebate and Supplier Investment Shares. To date a total of 12 million new shares have been subscribed for and 22 million old shares exchanged. Farmers who transact are being issued shares at an effective valuation of $4.50 a share. “Those who do not accept the exchange offer are transferring value to those of our transacting shareholders who do exchange,” says Silver Ferns chairman Eion Garden.

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Lambing is being blamed for a slow take-up of Silver Fern Farms’ cash issue.
The offer deadline is Friday, but as of late last week just 15% of the co-operative’s approximately 8000 eligible shareholders had responded reports The ODT.  Of that 15%, 60% had taken up the cash issue entitlement.  Silver Fern Farms  chief executive Keith Cooper said many rebate shareholders were in the middle of lambing which was diverting their attention from paperwork, but he expected interest to increase this week.

He said it was too early to say how much fresh capital would be raised, but company executives had earlier said they hoped for $80 million. Reminder notices had been sent out which should increase activity. Mr Cooper said the response at this stage was consistent with voting turnouts for SFF’s July shareholder meeting, which changed the constitution and paved the way for the capital restructuring, and Meat and Wool New Zealand’s recent levy referendum.

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Two of the leading players in NZ agriculture – Silver Fern Farms and Livestock Improvement (LIC) – have jointly developed a pilot programme which when proven, will deliver “enabling knowledge” to implement an integrated supply chain from farmer partners of Silver Fern Farms to their international customer partners.

· Silver Fern Farms is New Zealand’s leading procurer, processor and marketer of lamb, mutton, beef, venison and associated products to more than 60 countries
· LIC is one of the largest integrated herd improvement organisations in the world with proven data and analysis management.

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Silver Fern Farms says it has listened to concerns about its inaugural Backbone supply contracts last year, and made changes to simplify them reports The ODT. This year was shaping up as big year for Silver Fern Farms, which last month was given shareholder approval for a new capital restructuring programme and in October will launch its global branded consumer lamb and venison product range.

SFF livestock marketing manager Grant Howie said the Backbone contracts were a key to supplying that product range, but also UK and European retailers with which it has formed supply partnerships. Farmers can choose between two Backbone programmes. The committed supplier programme linked the delivery of stock to a designated period for which farmers would be paid a weekly schedule plus 10c a kg supply premium for lamb, and 5c a kg for beef and venison.

The integrated supply chain programme rewarded farmers with a contracted price for supplying stock which met customers’ criteria and specifications. Those contracts were: Lamb Backbone partnership club, M&S Lamb, organic lamb, North American Lamb, Backbone prime beef, Backbone bull, Backbone cow, Backbone Angus beef, Backbone Angus bull, Backbone Angus cow and venison Backbone partnership.

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A new player in the livestock trading business was a backwards step in efforts to shorten the livestock supply chain, Silver Fern Farms (SFF) chief executive Keith Cooper said yesterday. The South Island rural servicing co-operative, CRT, has four livestock agents in Tasman, West Coast, North and Mid Canterbury and has stated that within a year it hoped to have coverage throughout the South Island and lower North Island reports The ODT. Mr Cooper said he was astonished that at a time when farmers wanted aggregation, consolidation of marketing strategies and investment in the supply chain, a co-operative was adding another layer to it.

“One can only question the governance of a business which sees merit in a strategy which clearly adds no value, just cost, and will serve to further fragment the supply chain to market and the relationship with farmers and market, a key issue identified in the recently released Ministry of Agriculture and Forestry report, Meat – the future.” CRT chief executive Brent Esler CRT has described SFF’s reaction as “a storm in a teacup,” saying livestock servicing was a logical step for the rural servicing company to take on behalf of its co-operative shareholders. Mr Esler said CRT had bought Kinzett Livestock in Richmond and Alpine Livestock in North Canterbury and its four agents were now offering livestock services to CRT shareholders.

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A strengthening dollar exchange rate could spoil the party for what should be a second consecutive year of healthy returns for sheep and beef farmers. Silver Fern Farms chief executive Keith Cooper told farmers at a field day near Gore last Thursday that while prospects were bright, the exchange rate was closer to 2008 levels than 2009. While there was time for it to fall and not be disruptive, Mr Cooper said there was some nervousness reports The ODT.

Lamb prospects remained bright and European retailers were investing heavily in lamb, to increase its availability. Mr Cooper said while there was little likelihood retail prices would increase, equally, they should not fall. He said he was “relaxed and confident” about beef prospects, with prices cyclical but trading within a band both for manufacturing beef to the United States and prime cuts to Asia. Venison was causing some concerns. Venison was still selling but orders from European buyers were slow and it was vital prices were not pushed higher, he said. He urged farmers to think carefully about their kill profile because of that.

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Silver Fern Farms shareholders have voted in favour of a restructure, backing a management plan to raise up to $128 million to allow the meat processor to modernise and match the demands of choosy European supermarkets reports Stuff. In recent weeks the bosses of New Zealand’s biggest meat co-operative have been travelling to sell its capital restructuring scheme to farmers.The Dunedin-based co-op hopes to raise up to $128m and consolidate shares into one more easily tradeable class. Yesterday, shareholders took a step toward implementation of the “market led strategy” by voting in favour of important constitutional changes, with 76.46 per cent support, SFF said.

About 4500 suppliers were eligible to decide on the plan, and 42.24 per cent of them voted. SFF plans to go its 20,000 shareholders to raise more than $80m and up to $128m. It has $189m of debt. Chairman Eoin Garden said the result was a clear endorsement of the need to revamp the co-op’s capital and governance structure in support of its long-term strategy. Under the plan farmer shareholders will swap their rebate shares and supplier investment shares for new ordinary shares which can be traded on the Unlisted exchange. The outcome demonstrated farmers wanted new thinking, new ideas and were prepared for change, Mr Garden said.

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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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Silver Fern Farms’ debt-burdened co-operative structure is no longer viable and the company needs an injection of money to survive, its chairman Eoin Garden says.  “For 60 years it has been a good business model. We had a debt-funded business. That environment has changed,” Garden told 30 farmers at a meeting in Christchurch yesterday reports NZX. The meeting was one of 15 planned across NZ to discuss a proposal to open SFF’s farmer share register to other investors and raise up to $128 million from existing shareholders. The move would effectively end the co-operative status of the company, but farmer shareholders would retain voting and board control. New shareholders would have weaker voting rights than farmers.

NZ’s biggest meat co-operative wants its farmer shareholders to swap their rebate shares and supplier investment shares for new ordinary shares, which could be traded on the unregulated share exchange Unlisted. Those shareholders would then be eligible to pay cash for two more shares at a dollar a piece. In a presentation to farmers, Garden and SFF chief executive Keith Cooper said the co- operative structure was no longer the ideal model. Garden said he knew many farmers were worried about the co-operative status being threatened, but he believed shareholders were getting confused about ownership and the business. “It’s not about losing control. We will lose control of the co- operative if we don’t put the capital base in place.”

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