Farmers look to share buy to shut out interloper

WELLINGTON - Richmond meat company farmers and shareholders say they may rally to buy a block of shares to shut out the invading South Island Primary Producers Cooperative Society (PPCS).

A well-placed source said farmers worried about losing their regional company to PPCS were preparing to launch a share buy to support Waitotara Farmers Holding Co shareholders, whose Waitotara meat company merged with Richmond last year.

PPCS, which said in August that it wanted to buy 51 per cent of Richmond, alarmed Hawkes Bay farmers last month when it boosted its stake in HKM Nominees, a shareholder in Richmond, to 67 per cent. HKM has 25.5 per cent of Richmond.

Correspondingly, Richmond's chairman, Hawkes Bay farmer Sam Robinson, was replaced by Auckland accountant Bob Croker, and HKM director Paul Morgan resigned, his seat taken by PPCS chairman Jim Pringle - five weeks after December's annual meeting.

Leading farmers contacted for comment said they did not know of any move to buy a block of shares. But some said they would be interested.

Rod Pearce, a director and 3.6 per cent shareholder, who represents Waitotara farmers' 9.3 per cent stake on the board, had no comment on the speculation.

He said he was disappointed that so many changes had been made on the board so close to the annual meeting.

"One of the cornerstone understandings of the Richmond-Waitotara board was that there would be stability in the governance structure of Richmond for the ensuing 12 months, to allow everything to shake down," he said.

"It is not a contract but it is some variation of the understanding that Waitotara had at the time of the merger.

"It is some variation from the understanding we had, and we are a bit concerned about that."

But Mr Pearce said PPCS could not be held accountable because the arrangement did not involve it.

Another shareholder said PPCS was in "takeover mode."

Two industry sources were of the view that Mr Pringle and any PPCS director on the Richmond board had a conflict of interest.

Another shareholder predicted it was only a matter of time before HKM's last director on the board, Alan Haronga, excused himself and nominated an alternate director. That would be PPCS chief executive Stewart Barnett, said the shareholder.

Asked if he would join the board, Mr Barnett said he worked for PPCS.

"So, quite clearly, my board would be making that decision but right now the answer to that is, 'No'." Mr Barnett said PPCS had no wish to impose itself on anyone. He said there was no conflict of interest.

"We are not in the same livestock catchment areas and in the New Zealand business there is no conflict of interest. We are of the belief that in some areas a coordinated approach to the marketplace is beneficial to all farmers."

Peter Spencer, a Richmond director who owns 10 per cent of the company through his Toocooya Nominees, owns 19.7 per cent of Affco, also through Toocooya.

Affco chairman Sam Lewis said Mr Spencer had two director representatives on the Affco board, Arthur Young and Don Clark.

An observer said concern about PPCS's agenda was highlighted by the apparent conundrum of it issuing a notice in August saying it wanted to acquire 51 per cent, followed later that month by a letter from Mr Pringle to all shareholders saying PPCS wanted to safeguard its existing cornerstone shareholding. Mr Pringle could not be contacted.

Mr Croker, as new chairman, also dismissed the suggestion of a director conflict of interest.

He said there was no livestock procurement competition between Richmond and PPCS.

"PPCS is run out of Dunedin, and operates nearly exclusively procurement-wise. I say 'nearly' because the South Island companies buy a little in the North Island and vice versa. But they operate in totally different markets.

I don't perceive Mr Pringle has any conflict of interest whatsoever - it's all perceived. And secondly, he brings a wealth of experience to the board table."

But a big livestock company claimed the procurement market was undoubtedly a national one.

The Companies Office said it had received no complaints about a possible conflict of interest on the Richmond board.

The Commerce Commission said it was monitoring developments at Richmond, as it did with hundreds of other companies where shareholdings changed. Monitoring was at a preliminary stage.

Mr Croker said he was not prepared to comment about the direction of the company and challenges facing it till he had "a full and proper understanding."

He said he would work for the benefit of all shareholders and had no vested interest in, or represented, any single shareholder or shareholder group.

- NZPA