Fight for control of Richmond faces court test

By PHILIPPA STEVENSON

Two of the country's major meat companies are likely to spill more blood on the floor of the High Court at Christchurch today than is seen on a killing chain.

The battle for control of listed Hawkes Bay meat company Richmond by Dunedin-based farmer co-operative PPCS has gone more rounds in the past five years than most people care to remember.

In the hearing, beginning today and expected to run for nine days, the court will hear a range of disputed claims, including an allegation that PPCS did not comply with a requirement to divest itself of Richmond shares in June 2000, and did not disclose continuing interest in shares.

One broker said yesterday that the only thing clear about the case was that both sides believed they were legally in the clear.

"Let the high-powered QCs sort it out," he said.

The market for Richmond shares was "on the skinny side" but that appeared to be related to the meat industry as a whole, not to the dispute.

The share price for the other major North Island meat company, Affco, was also weak, he said.

The divide between the companies is reflected by farmers on the different sides of Cook Strait.

In the South Island, Federated Farmers meat and fibre chairman Murray Taggart, a PPCS shareholder, said the co-operative seemed prepared to involve Hawkes Bay farmers as much as it did those in the south.

"Really, what is so bad about that?" Taggart asked. "To me, PPCS is doing it [investing in Richmond] for sound commercial reasons, and there could be some sound commercial reasons why farmers should welcome it."

But Tom Crosse, a retired farmer and former Richmond director, who is part of a concerned shareholders group involved in today's case, said he hoped it would end PPCS investment in Richmond.

The divestment was a "not-negotiable" goal, he said.

But Taggart believed there was also support for the southern company among Hawkes Bay farmers.

"I would've thought they would have been [more] happy with a farmer-owned company coming into Richmonds than a non-farmer-owned company," he said.

There were advantages for PPCS in being able to extend its processing season with the different pattern of stock flow in the North Island.

The implications of the case could be far-reaching, with the potential for PPCS to be ordered to sell some or all of its shares in Richmond - or for its majority shareholding to be confirmed. Either would allow both companies to go ahead, knowing where they sat, Taggart said.

The dispute was bad for the companies because it was distracting both management teams.

Crosse said his objections to PPCS' shareholding stemmed partly from the way it tried to overcome the obvious reluctance of Richmond shareholders to embrace the co-op's overtures.

Hawkes Bay farmers had twice sought to co-operate with PPCS but the farmer co-operative "has been hellbent on taking us over. I don't like that," he said.

The greater problem was the different company philosophies. PPCS was a commodity trader whereas Richmond was moving to be a food marketer, he said.

PPCS had recently been working to change that image but it had not won him over, Crosse said. "I don't think a leopard changes its spots."