Silver Fern investor has $300m to spend

Rob Hewett, chairman of Silver Fern Farms, has been to China to meet Bright's representative.

Chinese firm’s deep pockets challenge for those wanting to keep control in NZ.

Shanghai Maling Aquarius - the Bright Foods listed subsidiary which has been lined up to take a 50 per cent stake in Silver Fern Farms - is understood to have a $300 million war chest to back its bid for a slice of the Kiwi meat co-operative.

The extent of the proposed Chinese commitment has made it more difficult for those Silver Fern Farms shareholders who want to keep control of their hybrid co-operative in NZ ownership to persuade their board, and more importantly the company's bankers, to support other alternatives.

Herald inquiries reveal that sufficient support was earlier raised from a range of parties for a $40 million to $45 million underwrite for a rights issue to help recapitalise the company. But one of the parties - who wished to remain anonymous - said that did not go far enough for the co-operative's banking syndicate. At least $70 million would be required and that would have flowed straight out the door to reduce debt.

It is understood other endeavours to find a "white knight" to ensure Silver Fern Farms remains majority-controlled by Kiwi interests have been pursued.

But the company is fast running up against a banking-imposed deadline to reduced its debt exposure.

Shanghai Maling's strategic overseas acquisition plan is focused on expanding globally and increasing business in countries that export large amounts of beef, such as Australia, New Zealand and Argentina.

Shares in Shanghai Maling were suspended from trading on August 18 pending a large announcement. More information was due to be released by August 25 but the Chinese company extended the trading halt for a maximum of one month.

Silver Fern Farms' own shares were suspended from trading on the Unlisted platform on July 24 while it "continued to progress its capital-raising initiatives".

Interestingly, shares in Shanghai Maling had spiked up just ahead of the August 18 trading halt which suggests "news" had begun to leak over the negotiations, which have been fronted by Goldman Sachs.

Silver Fern Farms chairman Rob Hewitt has been to China to meet Bright's representative.

Silver Fern Farms had to arrange new banking facilities after it missed repayment on two tranches of debt totalling $41 million. But it has since reduced its debt and has said it expects the year-end total to be $140 million to $170 million, compared with $289 million previously.