The sale to an American-based investment group was announced in May, subject to OIO approval, and Scales managing director Andy Borland this week said there is no indication of when a decision might be made.
He expects it will take a fair while.
Scales is likely to end up with its borrowings paid down and about $100m in cash if the sale is settled. Borland told the annual meeting in mid-June the directors and management are doing due diligence on two agri-sectors for possible investment but wouldn’t give detail. That remains the situation.
Asked if the investment group will be ready to buy as soon as a positive reply is received from OIO, he said that is unlikely.
Previously, he said Scales is open to making overseas investments that complement its New Zealand agri-business operations, notably the Mr Apple business, and could just as easily make a number of smaller acquisitions in the $30m to $40m range than one big buy.
The company has branched out, licensing growers in the Seattle area of the United States to grow its new Dazzle apple variety. Scales will get a commission on apples eventually sold. The main objective is to promote the new variety mainly into Asia but also for sales in North America.
“We hope they plant a fair volume of them because that would create more interest and visibility for the brand.”
Small volumes of NZ-grown Dazzle will be exported next season with volumes picking up in 2021 to 2023. Eventually, US growers could be growing as much as the NZ acreage, Borland said.
At the time of the annual meeting about two-thirds of the Hawke’s Bay apple harvest had been packed and about one-third sold. The total pick from Mr Apple orchards was 5.1 million apples, a 14% lift on the volumes in the last two seasons. Mr Apple has exported about 76% of its total crop and the 2018 figure is expected to be in line with that.
Apple sales are usually completed in October and the season is going to expectations.
He told shareholders all group businesses are trading in line with guidance forecasts.
If the Polarcold sale is completed it will have a June 1 settlement date and will reduce group operating earnings (Ebitda) by about $6m. That will be largely offset by interest being paid on the purchase price from June 1 till actual settlement.
The food ingredients division continues to have strong production and sales.
In a chart shown to the annual meeting, Scales illustrated its agribusiness investment universe as agriculture with dairy, meat and wool, animal products, arable, poultry and eggs, fisheries/aquaculture, forestry, viticulture, horticulture, apiculture and innovative processed food.
It is from that group Scales has identified the two areas it is following up. It wants to invest in vertically integrated businesses focused on exports and on China/Asia.
Chairman Tim Goodacre told shareholders the company is keeping a close watch on its share register to try to avoid a shareholder unintentionally tipping Scales into overseas entity status, which would occur at 25%. The overseas ownership is about 21.6%.
