KEY POINTS:
Yields on PPCS bonds have again leapt to 20 per cent as investors display nervousness about the country's largest meat company.
The NZX-listed December 2010 bonds were offered at 22 per cent today on the secondary market, while the sell offer was at 15 per cent. If sold at 22 per cent an investor would only receive $73 for every $100 of bonds.
The March 2009 bonds were offered at 20 per cent and last traded at that level. Turnover was light.
The bonds reached similar levels in May, which prompted a "please explain" from the stock exchange to the Dunedin-based company.
As he did in May, PPCS chief executive Keith Cooper downplayed the rise, saying he knew no reason for it.
He told The Independent business weekly that initiatives taken recently in the annual plan would be reflected in the financial statements.
These would include reduced debt, improved equity, positive cashflow and an improved stock return.
The rise in the bond yields was irrelevant as PPCS was not looking to raise more bonds, he said.
In late June, the farmer co-operative and Southland-based No 3 company, Alliance Group, said they would investigate working together in what some industry analysts said was a precursor to a merger. However, PPCS said the move was merely to look at ways of improving farmer returns.
PricewaterhouseCoopers has already put its scoping report to the respective boards but the company would not say when they would report.
Mr Cooper said in June the talks had been prompted by the strength of the New Zealand dollar and the plight of farmers.
It had earlier warned the strong currency meant it had probably breached banking covenants as its interest ratio had blown out.
PPCS is due to report its result in the year to August 31 in late October.
In the first half, it reported a net loss before interest, tax and non-recurring items of $8 million, a 42 per cent improvement on a $13.7m loss for the same period a year earlier.
The first half of each financial year is traditionally the period of lowest profitability in the meat industry.
Stronger half year operating cash flows allowed it to cut borrowings by $41m from a year earlier.
PPCS is responsible for 32 per cent of New Zealand's sheep meat exports, 31 per cent of beef exports and 58 per cent of venison exports. It owns 24 processing plants, and employs about 9000 staff at the peak of the processing season.
- NZPA
