Seeka

[Toddy]

Seeka and Eastpack are in different cycles with their modernization. You can't compare the funding models 100 percent because Eastpack is totally grower owned. So Eastpack is forced look at other funding alternatives.

Seeka got caught out because they purchased assets at the top of the investment cycle when money was cheap. The assets they purchased were not what they thought they were. This lead to a record fruit loss for their growers the previous season. Then we went into a low fruit volume season.

The hangovers are significant. Losses on the leased orchards will take time to fillter through from a cashflow perspective as a large chunk of the losses are sitting on their books with the growers.

To hold onto their grower base Seeka offered discounted medium term fixed price packing contracts. That's right, fixed.

Seeka is cutting staff, restructuring internally, and cutting costs.

With fruit volume increases next season the cashflows should be impressive. But the unknown question is to what extent the Seeka overheads are excessive.

The question. What would I do. I would divest all not performing assets and increase the capital expenditure significantly into IT and robotics. Not cut capital expenditure as Seeka has done.

Disc. I hold Eastpack and Seeka shares.

[bull....]

Seeka and Eastpack are in different cycles with their modernization. You can't compare the funding models 100 percent because Eastpack is totally grower owned. So Eastpack is forced look at other funding alternatives.

Seeka got caught out because they purchased assets at the top of the investment cycle when money was cheap. The assets they purchased were not what they thought they were. This lead to a record fruit loss for their growers the previous season. Then we went into a low fruit volume season.

The hangovers are significant. Losses on the leased orchards will take time to fillter through from a cashflow perspective as a large chunk of the losses are sitting on their books with the growers.

To hold onto their grower base Seeka offered discounted medium term fixed price packing contracts. That's right, fixed.

Seeka is cutting staff, restructuring internally, and cutting costs.

With fruit volume increases next season the cashflows should be impressive. But the unknown question is to what extent the Seeka overheads are excessive.

The question. What would I do. I would divest all not performing assets and increase the capital expenditure significantly into IT and robotics. Not cut capital expenditure as Seeka has done.

Disc. I hold Eastpack and Seeka shares.

was the person who wrote the lease agreement a builder lol
yea i can see how the profit sharing costs will come thru over time
agree some of the returns on assets are not very good but i would cut costs first like they are doing then re- access non performing assets or look at the people managing them to see if there fit for purpose and the reason for non - purformance then get back on the job of cap investment

[bull....]

Seeka Completes Banking Refinancing

Seeka has extended 66% of the facilities to 31 January 2025 and 34% to 31 January 2026, as well as obtaining a waiver for the net leverage ratio and interest cover ratio banking covenants for the 30 June 2023 and 31 December 2023 test periods. The 30 June 2024 and 31 December 2024 banking covenants have been set on a “step down” basis to enable Seeka to reach its long-term covenants of 3.25x for the net leverage ratio and 2.00x for the interest cover ratio. Seeka remains firmly committed to reducing debt and building headroom into its banking covenants.

https://www.nzx.com/announcements/413976

So im presuming no dividend's for quite a while perhaps even none next yr based on the loss forecast second half yr and the need to get debt down as per banking arrangement

[iceman]

Seeka Completes Banking Refinancing

Seeka has extended 66% of the facilities to 31 January 2025 and 34% to 31 January 2026, as well as obtaining a waiver for the net leverage ratio and interest cover ratio banking covenants for the 30 June 2023 and 31 December 2023 test periods. The 30 June 2024 and 31 December 2024 banking covenants have been set on a “step down” basis to enable Seeka to reach its long-term covenants of 3.25x for the net leverage ratio and 2.00x for the interest cover ratio. Seeka remains firmly committed to reducing debt and building headroom into its banking covenants.

https://www.nzx.com/announcements/413976

So im presuming no dividend's for quite a while perhaps even none next yr based on the loss forecast second half yr and the need to get debt down as per banking arrangement

One would hope so. It would be prudent given the shocking year SEK has had and the ongoing weather events causing havoc in the industry, that SEK suspends dividends for several years and pays down debt.

[BlackPeter]

Seeka Completes Banking Refinancing

Seeka has extended 66% of the facilities to 31 January 2025 and 34% to 31 January 2026, as well as obtaining a waiver for the net leverage ratio and interest cover ratio banking covenants for the 30 June 2023 and 31 December 2023 test periods. The 30 June 2024 and 31 December 2024 banking covenants have been set on a “step down” basis to enable Seeka to reach its long-term covenants of 3.25x for the net leverage ratio and 2.00x for the interest cover ratio. Seeka remains firmly committed to reducing debt and building headroom into its banking covenants.

https://www.nzx.com/announcements/413976

So im presuming no dividend's for quite a while perhaps even none next yr based on the loss forecast second half yr and the need to get debt down as per banking arrangement

Good on them for getting this potential issue out of the way. Agree with your assessment for the dividend, but would not have expected anything different.


Seriously - who would want a company under pressure to pay dividends?

[Toddy]

You have to love the banks. From the glass towers they have come up with 'sustainability' lending.

Maybe Seeka and the kiwifruit growers should be allowed to claim carbon credits for all of those Kiwifruit tree/vines planted.

[whatsup]

You have to love the banks. From the glass towers they have come up with 'sustainability' lending.

Maybe Seeka and the kiwifruit growers should be allowed to claim carbon credits for all of those Kiwifruit tree/vines planted.

I have been asking that for a couple of years but no one can give an answer one way or the other .

[kiora]

"Under the current regulations, sadly you cannot register orchard species, vines and crops for carbon credits. This puts all kinds of delicious trees out of the running, including kiwifruit, olives and avocados. Tip: Most trees that grow to 5m are eligible, provided they're woody."
https://www.carboncrop.nz/post/is-my...#39;re%20woody.

[bull....]

Gold kiwifruit growers lose fight to exclude lucrative licences from property valuations



https://www.stuff.co.nz/business/far...rty-valuations

[RTM]

https://www.rnz.co.nz/news/country/4...rowers-worried

“She said last year the region's kiwifruit had a poor flowering because of the warm temperatures, and this year the lack of chilling had been even worse.”

I wonder how much cold is needed ? Down to 4C this morning, same for a few days. Northland.
Can anyone report on the Bay of Plenty ?
Worrying for the industry if this can’t be resolved.