Have a look at how the Gulf monarchies are buying up Africa to ensure food security.
SFF grow the beasts, process them, sell them to Bright, who move them through to retail.
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This reminds me of the "old" days in the meat industry when overseas firms such as the Vesteys and Borthwicks had a large measure of control of the NZ industry. They, too, had the overseas contacts for distribution and sale to the consumers of the product. The wheel turns?
Appairs to be good for farmer shareholders now for the short term,longer term ??? Who would know
http://www.interest.co.nz/rural-news...-banks-plus-it
SFF doesn't own the farms. How then does SFF grow the beasts? The reality is the farmers own the farms and operate SFF as a co op to do the processing. Shanghai Maling/Bright is proposed to own half the processing and already has enormous retail and wholesale operations in China. As one commentator points out SH/Bright could still sell SFF products without owning half it. The question is whether the advantage Shanghai Maling sees in a stake in the processor will be consistent with the farmers interests in the long term.
Last year the financial cost of SFF was $37.4 m. Assuming everything remains the same, SFF share holders would get a $0.187 saving per year per share (50% of the financial cost/100 m shares) after Shanghai Maling inject capital. It would be good return to shareholders if the saving becomes divident.
Words from SFF Annual Report on Shanghai Maling investment: "The investment is now only subject to regulatory approvals in China and New Zealand. We hope to positively conclude these processes, and commence the partnership in the second quarter of calendar 2016".
The is no sign that the regulatory approval on Chinese side has been obtained or close to that. What if approval cannot be obtained in China (due to capital control or other reasons)? I would guess the promised special dividend would be impossible. Further, it seems that the agreement with Maling does not have a compensation clause as SFF did with PGG Wrightson many years ago. Would the banks still support SFF?
You would have to presume there is some compensation clause etc within their agreement.
All silent in recent months, but hasn't been an easy season - lamb markets are difficult and the kill gone - but less farmgate competition. Beef probably not really going to hit a peak kill = get farmer prices down and maximum plant efficiencies.
Would think the banks are looking at them more kindly but still with the hammer down. Looking at their cashflow from operations, over $100m out of $152m was from inventory and trade & receivables - so can only do this once.
I examined SFF's latest annual report and its "Notice of meeting and shareholder information pack"(Sept. 2015) and could not find a compensation clause (if Shanghai Maling discontinues investment in SFF) .
A recent article on NBR reported the receivership of Maling's subsidiary company in Czech Republic.
http://www.nbr.co.nz/article/silver-...-next-negative
Maling's share price has dived from around 14 Yuan at the beginning of 2016 to about 9 Yuan today.
http://data.p5w.net/stock/index.php?code=sh600073
Maling recently announced that it has closed two subsidiary companies in China, with big losses.
Although Maling is a big and thus unlikely to change its mind in establishing the joint venture with SFF, nobody from SFF has mentioned the consequence if the joint venture could not be established. Can SFF still survive without the investment from Maling?
SFF was extremely luck in 2008 when Craig Norgate made a mistake to sign an unconditional agreement to buy 50% SFF and could not borrow from banks. It got $10m compensation from PGG Wrightson (?).
$30m and 10m shares - https://pggwrightson.co.nz/~/media/D...409.ashx?la=en
The recent record of Other Chinese investment in the meat industry is less than stellar - Prime Range Meats and BX Foods.
As they say, watch this space.....
The June 30 deadline for settlement is approaching.
Six months after SFF shareholders voted for capital injection from Shanghai Maling, there is little news on the matter. would John Key's visit to Beijing next week catalyses the process of regulatory approvals on both sides? or an extention to deadline would be required?
Given the Bell Group and Others legal action and now Winston Peters wanting to re-run a Wine Box inquiry on SFF, being told there is someone at reception from SFF wanting advice on a matter of securities law any prudent solicitor would be wise to hide under their desk.
http://www.stuff.co.nz/business/farm...-farms-conduct
Boop boop de do
Marilyn
I would believe it was a stupid business decision to buy half of SFF at $261m. If the transaction is blocked by NZ side there would be two implications: 1) SFF would not be able to find a new buyer who is willing to pay $261 for half of the company; 2) it gives Chinese an excuse to delay the FTA upgrading. The world is not short of protein supply. As recent as 2 years ago people believed Chinese would not survive without NZ milk. Look at the market now! Milk is flooding everywhere. Red meat would follow the milk story.
If anyone loves to own SFF they could achieve the goal by starting to buy SFF shares at unlisted market at $1.00/share. Eventually beef/sheep farmers would retire and they have to sell shares at $1 or lower.
I wonder if the difference in future outlook in supporting information given to farmers before the merger approval meeting and the positive profit announcement after the vote will end up biting the bankers who control SFF in the bum.
http://www.scoop.co.nz/stories/BU160...requsition.htm
Boop boop de do
Marilyn
http://www.stuff.co.nz/business/farm...maling-meeting
Will this turn into a rerun of Bell Group and Others v PPCS?
Who advises these guys on securities law, Lionel Hutz?
Boop boop de do
Marilyn