The two groups have had ongoing discussions about technology over the past two years and this relationship led the Dunedin-based company to approach JBS, as well as some other potential investors, about being a cornerstone shareholder to help fund several growth opportunities.
The investment, subject to Scott Tech shareholder approval and some regulatory work as well, could bring in anywhere from $20 million to $60m for the business, depending how many shareholders sell shares to JBS.
Hopkins expects a final figure that will pay down the company’s borrowings – about $26m at March 31 out of total assets of $88m – and leave a substantial cash amount for accelerating growth.
The JBS parent company is Brazilian-based and the world’s biggest meat processing business.
The plan is for a $10m issue of shares to JBS Australia at $1.39 a share, an offer to shareholders from JBS at the same price, a one-for-eight rights issue at $1.39 for current shareholders who want to increase their investment in the company, and finally another placement if required to take the JBS holding to 50.1%.
The shares jumped 12c to $1.45 on the NZX today, indicating a positive response to the plan.
Scott Tech has a loyal base of shareholders but is aware that some large holders will be prepared to sell shares to JBS, Hopkins said. The company hopes for a shareholder meeting before the end of the year.
Scott Tech has high-class robotic technology over a number of sectors – mining, appliances, industrial robotics and meat processing, as well as a robotic milking business in a joint venture with a group of New Zealand dairy farmers.
Scott Tech has installed an automated lamb processing unit in a big JBS Australia meat works in South Australia and is also working with it on beef automation.
Its lamb processing robotics is largely carried out in a joint-venture business, Robotic Technologies Ltd, with meat processor Silver Fern Farms and is in several NZ meat plants, but most of the beef robotics is done by Scott Tech itself, Hopkins said.
It has also been approached to work on pork processing robotics and the new funding would give it capacity for this.
JBS is also regarded as one of the international companies that might be keen to invest directly in Silver Fern as part of the capital-raising process it is pursuing at the moment.
JBS Australia was keen for Scott Tech to grow all its robotic businesses, not just the meat-related projects, Hopkins said.
Scott Tech has been planning a capital-raising for some time but is a small player on the NZX, which has struggled to attract domestic fund managers on to the share register. This prompted the search for a trade-related cornerstone investor with a like-minded approach to the industry.
