New Zealand’s largest meat producer Silver Fern Farms will reportedly ask its lenders for a waiver after the falling New Zealand dollar caused it to breach a banking covenant.
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Silver Fern said it was following accounting practice relating to its foreign currency hedging, The New Zealand Herald reported.
“As a result of this, and due to the recent rapid decline of the New Zealand dollar against the US dollar, Silver Fern Farms has advised its banks that it is not currently in compliance with its minimum shareholders’ funds covenant,” the company said.
According to reports, chief executive Keith Cooper said the non-compliance had nothing to do with business funds and the company had not breached any earnings covenants.
“It’s nothing to do with cash flows or anything like that, it’s essentially a non-cash item. It’s purely a hypothetical what-if measure at month end.”
The Dunedin-based co-operative had requested a waiver from its banks, which were considering revising the covenant to accommodate such volatility.
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