KEY POINTS:
The nation's biggest meat company, Silver Fern Farms, says it is still "in discussions" about big rural company PGG Wrightson's "unconditional and enforceable" offer of a $220 million cash injection.
Wrightson reneged on the bid to buy 50 per cent of the cooperative - formerly known as PPCS - when it was unable to pay the first part of the settlement on October 1.
"Although the transaction is, and remains, unconditional and enforceable, Silver Fern Farms is currently in discussions with PGG Wrightson to evaluate whether any alternative proposals are feasible for shareholder consideration and to deal with the default on the previously approved transaction," Silver Fern said yesterday.
Silver Fern chairman Eoin Garden said Wrightson would be in default if the transaction was not completed.
Wrightson chairman Craig Norgate said it is "unlikely" that its partnership with Silver Fern Farms will get off the ground.
"It is fair to say that we are now unlikely to be able to consummate the transaction in its current form within an acceptable timeframe to Silver Fern Farms," Norgate told the rural services company's annual meeting in Christchurch on Thursday.
He claimed the company was working through options to achieve its original aim of enabling farmers to earn better returns from red meat: "We are working hard to get our partnership with Silver Fern Farms back on track."
Norgate said the $220 million deal - on which Silver Fern was relying for significant debt repayment, and for restructuring its procurement and processing - was scuttled when bankers would no longer accept a variation in the way the equity component of the deal was funded.
"The required $110 million of equity was available by way of the placement and the underwritten share purchase plan; however, this was a different mix of equity from the package originally agreed with the banks - that being for a placement of the full $110 million," he said.
Garden told the annual meeting further benefits will accrue in the future from improved processing efficiency. The company reported a $117 million turnaround with a $37.7m net profit in the year to August 31. The comparable figure - adjusted to new international accounting rules - for 2007 was a loss of $79.3 million.
- NZPA
