New Zealand meat processor Silver Fern Farms said today (31 October) that it remains in talks to sell half the business to local rural services firm PGG Wrightson after the credit crisis scuppered the deal.
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Earlier this month, PGG Wrightson admitted that some of the banks providing funding for the NZ$220m (US$127.4m) deal had been unable to finalise their credit approvals.
The failure to raise the funding meant PGG Wrightson was unable to pay Silver Fern Farms the settlement due, although the two sides remain in talks over reviving the deal.
“Although the transaction is, and remains, unconditional and enforceable, Silver Fern Farms is currently in discussions with PGG Wrightson to evaluate whether any alternative proposals are feasible for shareholder consideration and to deal with the default on the previously approved transaction,” Silver Fern Farms said today as it published its annual results.
On Wednesday, PGG Wrightson chairman Craig Norgate told the company’s annual meeting that the firm was still interested in a tie-up with Silver Fern Farms.
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By GlobalData“The transaction with Silver Fern Farms is part of a partnership with the clear objective of enabling farmers to earn better returns from red meat. That objective remains in place and we are now working through a number of options to achieve the original outcomes,” Norgate said.
“This is taking some time due to the ongoing market volatility and it is fair to say that we are now unlikely to be able to consummate the transaction in its current form within an acceptable time-frame to Silver Fern Farms.”
For the year to 31 August, Silver Fern Farms swung back into the black with a net profit of NZ$51.2m. That result compared to a loss of NZ$68.8m a year earlier.
The company pointed to “a more favourable exchange rate, increased throughputs and cost containment measures” for the result.
