Dairy Meats turns down Affco offer

By PHILIPPA STEVENSON agriculture editor

Affco's fourth largest shareholder, Dairy Meats, could halve its stake in the company after an upcoming rights issue.

Dairy Meats, a farmer co-operative which processes bobby calves, owns 9.35 per cent of Affco.

But the company said it would not take up its entitlement in Affco's one-for-one rights issue - due to start trading on September 2. The move could dilute its holding to between 4.7 per cent and 5.2 per cent depending on the uptake of the rights by small shareholders.

Affco's major shareholders, Talley's Fisheries and Peter Spencer's Toocooya Nominees, have agreed with Dairy Meats to acquire 75 per cent and 25 per cent respectively of Dairy Meats' entitlement for 3c a right.

Dairy Meat's decision has forced the postponement of the issue, which if fully subscribed could raise $26.9 million for Affco from new shares issued at 10c each.

A special meeting had been scheduled for Friday for shareholders to decide whether to approve an underwriting agreement allowing Talley's and Toocooya to raise their respective stakes from 19.9 per cent and 18.7 per cent to a controlling 35 per cent and 25 per cent.

Now the meeting is scheduled for September 3, and will also consider the Dairy Meats transaction.

Affco company secretary Bill Ralph said rights trading before the meeting would be conditional on shareholder approval.

The cash raising is critical to the future of troubled Affco, which reported a loss of $14.7 million for the half-year to March. It needs to reduce its long-term, non-seasonal debt by at least $15 million, and to pay for $6 million of plant upgrades.