In a letter to shareholders, the chair of the company’s independent committee urged shareholders not to sell until they receive and consider the Independent Adviser’s Report.
Independent directors of takeover target Blue Sky Meats are urging shareholders not to sell just yet, despite owners of three of the largest shareowners having committed to do so.
Southern Lamb Investments, an entity formed by two of the largest shareholders, Andrew Lowe and HW Richardson Group, has secured 46% of the shares in the Southland meat processor at $3 a share.
In addition to their holdings, Southern Lamb has support from Blue Star Corporation, the fourth largest shareholder with 11.25%.
The largest shareholder in Blue Sky Meats, NZ Binxi (Oamaru) Foods, which owns 19.84%, has not yet taken a public stance.
The remaining shareholders are predominantly existing or former suppliers with individual shareholdings of 1% or less.
In a letter to shareholders, Sarah Brown, the chair of the company’s independent committee, urged shareholders not to sell until they receive and consider the Independent Adviser’s Report.
Brown said meat processors, including Blue Sky Meats (BSM), were experiencing favourable trading conditions.
In the seven months to January 31, unaudited accounts for BSM reveal earnings before interest, tax, depreciation and amortisation (Ebitda) was $11.35 million, 1340% higher than for the comparable period a year earlier.
A point of difference has emerged about the scope of and how to fund a significant capital upgrade of the single chain lamb plant north of Invercargill.
Southern Lamb has indicated it will cost $30m and if its takeover is successful, it may undertake a pro rata offer of shares to shareholders to fund that investment.
This is disputed by independent directors.
“The independent committee does not necessarily agree that this funding is required,” Brown wrote in a letter to shareholders.
The formal takeover documents issued by Southern Lamb notes that Lowe and Scott O’Donnell (HW Richardson Group) have been long-term investors in BSM, have extensive rural interests and see a need for an independent meat processor.
“With this expertise they value the need for a strong, NZ-owned, independent processor to remain active and competitive in the South Island’s red meat industry, a market otherwise controlled by the big four national players,” she said.
It notes the $3 a share offer is a 140% premium over the volume weighted average share price paid for BSM shares traded on the Unlisted Securities Exchange in the last year.
The deadline for accepting the takeover offer is 11.59pm on May 6.
