Kiwifruit giant Seeka sells out of Zespri

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Source:

NZN

Seeka, New Zealand's biggest kiwifruit grower, has sold out of Zespri Group after opposing constitutional changes at the monopoly export body that tie shareholdings to trays of fruit produced.

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Source: 1 NEWS

The changes were approved by more than 75 per cent of shareholders last month but among the resolutions was that shareholders who voted all their shares against the overhaul could require Zespri to buy back their shares.

Holders of 1.78 million shares - or about 1.5 per cent of shares on issue - exercised their minority buy-out rights and will receive $8.25 per share, which is within an $8-to-$9 a share valuation range provided by Cameron Partners.

The price amounts to a 9.3 per cent premium to Zespri's last trading price on the Unlisted platform of $7.55.

Seeka said it will receive about $6.11 million selling about 740,606 shares back to Zespri.

Chief executive Michael Franks said the money would be used to repay debt and for working capital.

"We didn't support them but the vote was passed," Mr Franks said. "It's about our return - we're paying back our debt."

On March 14, shareholders of Zespri voted on a series of resolutions that will impose a cap on the number of shares they can hold relative to trays of kiwifruit produced.

It will also phase out dividends for non-producing shareholders over seven years. Existing growers who stop producing after the vote would cease getting dividends after three years.

The vote comes after shareholders in 2015 approved plans to strengthen grower control amid concerns about an increasing misalignment between producers and shareholders.

The changes required an amendment to the Kiwifruit Export Regulations last year.

Of Zespri's 120.7 million shares on issue, some 18.1 million are held by people no longer connected with the kiwifruit industry and a further 29 per cent are held by producers at a ratio of below one share per tray, which Zespri deems "under-shared".

At the other end of the spectrum, 8 per cent of the shares are held by producers at a ratio of more than four shares per tray, known as "over-shared".

Zespri wants to aim for a ratio of one share for one tray produced but the new cap would set the limit at four shares per tray.

In calendar 2017, Seeka produced 25.5 million gross packed trays of kiwifruit in New Zealand, down from 32 million trays a year earlier.

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