Affco gets vote of confidence

By PHILIPPA STEVENSON agriculture editor

Dairy Meats says its decision not to take up its rights entitlement in Affco is a vote of confidence in the troubled meat company.

Dairy Meats director Don Seath said the bobby-calf processor originally took a shareholding to secure Affco's processing facilities, on which it depends in the North Island.

Its 9.35 per cent holding, which makes it Affco's fourth-largest shareholder, could be diluted to between 4.7 per cent and 5.2 per cent depending on how many small shareholders take up the rights.

Seath said there was sufficient interest in the issue - due to start trading on September 2 - especially by the two biggest shareholders, Talley's Fisheries and Peter Spencer's Toocooya Nominees, to make Dairy Meats' uptake unnecessary.

The dynamics of Affco's ownership had changed since Dairy Meats' 10 per cent made it the major shareholder. Talley's was a sound company which was determined to see Affco succeed, he said.

"[The rights issue] will dilute our shareholding, but the float will make Affco more secure."

Talley's, with 19.9 per cent of Affco, and Toocooya, with 18.7 per cent, have agreed to underwrite the issue to respective controlling stakes of 35 per cent and 25 per cent.

They have also agreed with Dairy Meats to acquire 75 per cent and 25 per cent respectively of its entitlement for 3c a right.

Shareholder approval will be sought for both transactions at a special meeting on September 3.

If fully subscribed, the issue could raise $26.9 million at 10c a share.