Alliance now raising more capital from their farmer shareholders - basically making more deductions from livestock payments to increase share capital, and increasing their share requirements. They were carrying over $170m of debt at the end of their last FY, which is at the low point of the season/activity and want to use Lender funding for seasonal working capital needs only.
The Board believes the proposed changes will:
- Restore balance sheet strength
- Meet lender requirements
- Continue our drive to be New Zealand’s most efficient red meat processor
- Enable the co-operative to pursue additional value capture opportunities
- Ensure Alliance remains 100 per cent farmer-owned
Tough for farmers to have to pony up for more investment when many will be making a cash loss for the year and prices/markets are poor.
Will be a problem as some farmers may choose to send their stock elsewhere - I understand Alliance's schedules are trailing behind others so if farmers go elsewhere, makes plants more inefficient, become more uncompetitive etc.
Will be an interesting watch......