The country’s biggest kiwifruit grower moved in early April to sell down its 740,606 shares as Zespri’s new constitutional reforms around share proportions start to come into effect.
The changes were approved by the required 75% of shareholders in March, with the aim under the Kiwifruit Industry Strategy Project to better balance Zespri shares to reflect grower ownership more closely.
About 15% of Zespri’s shares are held by people who are no longer connected to the industry and almost 30% of growers are under-shared compared to their tray production.
The changes enable the minority of shareholders who voted against the adjustment to exercise their right to sell and receive $8.25 a share, within the $8-$9 share valuation range provided by valuers Cameron Partners.
That is a 9% premium to the marketer’s last trading price of $7.55 a share.
Seeka did not support the changes proposed under the constitution review.
It has expressed concern over what it described in its 2016 annual report as industry inertia when it came to implementing offshore fruit handling and storage and a minimal approach to collaborative marketing.
Franks said the sale of the minority stake would amass the company $6.11 million in cash that would be well targeted to reducing the company’s reasonably significant debt of about $75m
“They represent funds that we can have 100% control over and they represent a low number of shares in total.
“The $6.1m is a big chunk of cash by any measure and we can use that effectively in our company to keep growing.”
There was a level of surprise in the industry that the option of selling down minority shareholding was available.
Of Zespri’s 120.7m shares about 8% are held by producers at a ratio of more than four shares per tray produced, classifying them as over-shared.
Zespri ultimately aims to have a ratio of one tray one share but will accept ownership of up to four shares a tray produced. There is, however, no compulsion included in the new regulations for suppliers to hold shares.
Seeka’s own shares continue to trade healthily on the NZX, gaining 18% in the past year, just ahead of the NZX 50 index average of 16%.
