P.P.C.S. applies for injunction

Press, 14 May 1981, Page 18

P.P.C.S. applies for injunction

The Primary Producers Co-operative Society yesterday applied in the High Court in Christchurch for an injunction restraining Canterbury Frozen Meat Company, Ltd, from issuing any further shares.

The chairman of P.P.C.S. (Mr R. A. Burnside) yesterday said that P.P.C.S. did not believe it made any sense either to dilute the strength and expertise of C.F.M. by moving into areas of doubtful value to C.F.M. shareholders, or to reduce the skills available and required to make C.F.M.’s mainstream meat processing operation profitable. “It has been strongly indicated to P.P.C.S. that C.F.M. is to make a determined effort to diversify outside the meat processing industry.

Our initial and additional shareholding was taken up to prevent that type of diversification taking place,” said Mr Burnside. “P.P.C.S. has no desire to control C.F.M. We have not sought the level of shareholding which makes it possible for P.P.C.S. to control C.F.M. — only a level of shareholding which would enable us to influence the C.F.M. board to understand the needs of farmers who are the lifeblood of the industry. “C.F.M. generates a good return for shareholders by remaining in meat processing. We do not want shareholders returns to be diminished by forays into areas of diversification outside meat processing,” he said. Mr Burnside said it seemed inconceivable to

P.P.C.S. that any meat processing company would react calmly while any stock and station agency became a major shareholder. “The fact .that Wrightson NMA is part of this country’s biggest conglomerate, whose basic interest is in serving the needs of investors rather than farmers indicates to us once more that our move was correct. It also suggests once more the danger of inter-locking directorships. “Comments from Wrightson NMA that their decision to invest in C.F.M. was to protect the competitive situation for their clients, hardly makes sense since P.P.C.S. has always strongly supported and gives its clients a firm undertaking that ..the open-door policy will be continued/;., ■ -