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  1. #41
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    Anyone thinking Chinese investment is a home run for Chinese access should look carefully at the sequence of Bright Investment in Synlait Milk and its insistence on control even when dropping under 50% shareholding. And the aggressive takeout of shareholders in Synlait Farms provides equally little ground for optimism for long term future of a farmer partnership with a large corporate shareholder.
    Quote Originally Posted by Sideshow Bob View Post
    Investment is one thing, but control is another. If they give away control, think farmers will vote with their feet.

  2. #42
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    How does an Investor get control and still be confident the farmers will supply. An interesting set of interests to negotiate through.

  3. #43
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    Quote Originally Posted by 1leon View Post
    Anyone thinking Chinese investment is a home run for Chinese access should look carefully at the sequence of Bright Investment in Synlait Milk and its insistence on control even when dropping under 50% shareholding. And the aggressive takeout of shareholders in Synlait Farms provides equally little ground for optimism for long term future of a farmer partnership with a large corporate shareholder.
    A farmer grows stuff to sell.

    A corporate farmer generally looks at vertical integration. In the case of SFF, from the pasture to the plate. In the case of Exxon, from the oil well to the petrol pump.

    It allows for much closer control of costs, and provides options as to where the profit can be made or declared.

    It is not easy to see the interests of farmers and corporate farmers aligning closely over time.

  4. #44
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    Farmers want the best price for their sheep and cattle and the best profitability of SFF. How could it be achieved? Who forced SFF borrowing so much? Farmers, not foreign investors!

  5. #45
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    Quote Originally Posted by GTM 3442 View Post
    A farmer grows stuff to sell.

    A corporate farmer generally looks at vertical integration. In the case of SFF, from the pasture to the plate.

    It allows for much closer control of costs, and provides options as to where the profit can be made or declared.

    It is not easy to see the interests of farmers and corporate farmers aligning closely over time.
    Neither Shanghai Maling, the now revealed purchaser, nor SFF seem to fit corporate farming in that neither company actually owns farms. However your comment as to options as to where the profit can be taken seems to fit well with both Bright and Shanhai Maling retail and wholesale distributing operations. Somewhat surprisingly with Synlait Milk, Bright did not seem to give any advantage to Synlait when NZ powder exporters were subjected to banning and later individual approvals.

  6. #46
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    Quote Originally Posted by 1leon View Post
    Neither Shanghai Maling, the now revealed purchaser, nor SFF seem to fit corporate farming in that neither company actually owns farms. However your comment as to options as to where the profit can be taken seems to fit well with both Bright and Shanhai Maling retail and wholesale distributing operations. Somewhat surprisingly with Synlait Milk, Bright did not seem to give any advantage to Synlait when NZ powder exporters were subjected to banning and later individual approvals.
    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.

  7. #47
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    Quote Originally Posted by 1leon View Post
    Neither Shanghai Maling, the now revealed purchaser, nor SFF seem to fit corporate farming in that neither company actually owns farms. However your comment as to options as to where the profit can be taken seems to fit well with both Bright and Shanhai Maling retail and wholesale distributing operations. Somewhat surprisingly with Synlait Milk, Bright did not seem to give any advantage to Synlait when NZ powder exporters were subjected to banning and later individual approvals.
    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.

  8. #48
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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?

  9. #49
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    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

  10. #50
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    Quote Originally Posted by GTM 3442 View Post
    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.
    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.

  11. #51
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    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.

  12. #52
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    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?

  13. #53
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    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.

  14. #54
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    Default Shanghai Maling's share price drops

    Quote Originally Posted by Sideshow Bob View Post
    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 (?).

  15. #55
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    $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.....

  16. #56
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    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?

  17. #57
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    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
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  18. #58
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    Quote Originally Posted by Marilyn Munroe View Post
    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.

  19. #59
    Senior Member Marilyn Munroe's Avatar
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    Default Requsition for shareholder meeting

    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
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  20. #60
    Senior Member Marilyn Munroe's Avatar
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    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
    Diamonds are a girls best friend.

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