S.F.M. plans centennial bonus

Press, 18 April 1980, Page 18

S.F.M. plans centennial bonus

A rebate share scheme for famer-supplier shareholders, i and a tax-free one-for-10 1 bonus issue on ordinary 1 shares, followed by a one-■ for-four cash issue, were announced yesterday by South- ; ■land Frozen Meat and Pro- , duce Export Company, Ltd, i to celebrate its forthcoming i centennial. The moves announced by J the chairman of directors J (Mr A. F. Gilkison) are: A ■ centennial tax-free bonus 1 issue of ordinary shares in 1 the ratio of one bonus'share 1 for every 10 shares present-) 1 iy held. J A cash issue, which will: ifollow the bonus issue, on; the basis of one ordinary: 'share for every share held. I at that time. j Application to the High , Court for approval of tax-, free distributions to share- ( holders from the company’s , share premium account, this . being a purely formal step. • Alteration of the company’s articles of association ; to allow supplier share-;* holders to elect to receive a rebate instead of a dividend. Mr Gilkison said the cen- I tennial bonus issue would be i about 1.170.000 ordinary 1

100 c shares, which would ber issued to existing share-) holders in the ratio of oner bonus share for every 101 shares at present held. I “The bonus shares will! participate in the interim !| dividend expected to be paid) in August,” Mr Gilkison!] said. The cash issue which will • follow the centennial bonus < issue, will be of about ( 3,220,000 ordinary 100 c , shares, which will be issued- ( at a premium of 60c a share h to existing shareholders inh jthe proportion of one new! 'share for every share held. | ( i Mr Gilkison said entitle!,, iments to the cash issue!! i would be calculated on;, (capital increased by the cen-J :tennial bonus issue. Rights] to the cash issue will re-, 1 nounceable. and application!l will be made for these to be 1 quoted on the stock ex- 1 change. It is expected these, 1 will quickly reach a price, of 50c each. < The shares would be pay- 1 able in two instalments, Mr < ! Gilkison said, the first of f 103 c by July 24, and the s second, of 60c by November 3. The shares can be paid up ( in full on application, i.e.: : 160 c a share, but no benefit J

iwill accrue to shareholders, (paying the second instalment; in advance. ; ! The shares of the cash! .'issue will not receive the: ■interim dividend expected to| ;be paid in August, but will) [participate in fuol in the] [final dividend expected to bej paid in March next year. “The directors anticipate, subject to any unforseen circumstances, being able to maintain the ordinary divi(dend at the rate of 15 per I cent on the increased capital,” Mr Gilkison said. ' Mr Gilkison said that the (company wanted to cement [still further its relationship [with the farmer-suppliers of [Southland and Otago. “As a tangible way of ■doing this, the directors proposed. subject to the approv-: al of the company in general] (meeting, to create shares for) farmer suppliers, he said. j “A rebate share will be an I ordinary share in S.F.M., with normal dividend rights, or the farmer supplier may elect to take a rebate in-! stead of dividend.” The rebate would be calculated on the number of stock units processed in a year on behalf of farmers. i

I, “If the number of stock /units processed in a year is [less than the number reJquired to give the farmer Jthe full rebate entitlement, Jthe balance will be paid as' [ after-tax dividend,” Mr Gil- [ kison said. “The shares, as . with all shares in S.F.M.J •'will be freely marketable) \ through the Stock Exchange,) (and on sale, rebate rights , will cease.” ; J The proposed cash issue! ' would give farmers the op-! portunity to acquire shares through the purchase of rights, he said. The question of the number of stock units was still being investigated, although it would depend on a share-holder-supplier’s percentage . of the total throughput of I the company’s two works. However, a full letter of [explanation would be sent to jthe. farmers of Southland • and’ Otago after the June (meeting. I The main reason for the [cash issue was to generate 'funds for the continuing expansion and development of the S.F.M. group activities imo the company’s second century, and to maintain its i traditionally strong share-

holder equity, Mr Gilkison said. Of particular importance was development of the company’s Cross Keys coal imine at Waimumu to"a fully i commercial operation. The (project was expected to cost [about $2 million and to produce commercial and domesi tic grades of lignite for the South Island. ) The company’s wholly- ' owned subsidiaries, SouthHand Freight Haulage, Ltd, and Knight Tailors, were also continually expanding. The transport company with its fleet of 95 units, re-> quired further expansion to meet demand and to service the commercial coal project. The clothing firm had full order books and further investment was necessary to increase its already significant export earnings. The company’s traditional policy of maintaining its two works to the highest standards in New Zealand had to be continued, and currently under construction at Mataura were a new carton freezing system, works offices and staff amenities, as well as general modernisation and upgrading of facilities.