Silver Fern shareholders crush opposition to China deal

There was a resounding cheer from the audience when Silver Fern Farms chairman Rob Hewett announced the shareholder vote result – 80.4% in favour of partnership with Shanghai Maling.

“It’s the first meeting of any sort I’ve had shareholders do that,” said Mr Hewett. “It spoke to me that they are engaged in this process. They want the Shanghai Maling transaction to progress.”

The meat processing co-op’s special meeting in Dunedin was the second time shareholders gathered to vote on the deal. The first time was last October when shareholders approved it with 82% support, but a group opposed to the transaction led by shareholders John Shrimpton and Blair Gallagher garnered enough support for another vote, this time as a special resolution.

Although Silver Fern’s board maintained the vote had no force, it ran an information roadshow and mobilised shareholders to be involved in the ballot.

The level of engagement was “better than I thought it was going to be to be honest,” said Mr Hewett.

However, there were no hard feelings against the dissidents.

“Personalities don’t come into this. It’s a business thing,” he said. “They’re our shareholders. This is a democratic process. We’re obliged to listen.”

Mr Hewett said he was confident the vote ended the group’s opposition.

“John very publicly said if the vote was over 75% he’d be the first to shake my hand. He wasn’t the first today, but he was pretty quick.”

At the meeting, Mr Shrimpton assured shareholders he would accept the result of the vote.

“It’s my expectation this has been put to bed. We’re getting on with the business,” said Mr Hewett.

About 2,610 shareholders voted representing 62.2% of eligible votes, with 80.4% cast in favour of the deal.

In numbers, there were 50 million votes in favour and 12.2 million against.

The vote easily surpasses the 75% threshold required for a special resolution.

About 80 dissident farmers had opposed the transaction, arguing that Silver Fern had other avenues to secure the capital it needs to thrive and shareholders didn't need to cede control of the company to Chinese interests.

They had argued the deal constituted a major transaction for the company, requiring a special resolution, rather than the ordinary resolution put to shareholders. They also argued that supporters of the sale, under pressure from Silver Fern's bankers, painted a poorer picture of the company's finances that was actually the case to rally support.

However, the Financial Markets Authority cleared the company over its disclosures related to the deal and the transaction is now awaiting the final hurdle, a sign-off by the Overseas Investment Office, which is expected by September 30. The deal is expected to be settled on January 4 next year.

Mr Hewett said the board "strongly disagreed with the negative stance on the transaction taken by Messrs Shrimpton and Gallagher."

"They have caused significant disruption and their actions have been damaging to the company," he said. "Their allegations have proven to be entirely unfounded. Independent reviews by both the Financial Markets Authority and the Registrar of Companies have found no issue with the information provided to shareholders in October 2015 or the actions of the directors."

As well as providing capital to strengthen Silver Fern's balance sheet and allow it to ramp up product development and consumer marketing, the tie-up would give the company access to Shanghai Maling's supply chain and parent Bright Food's wholesale and retail networks for distribution into China, it said at the time the deal was first flagged last year.