Apple and Pear Board to issue public debentures

Press, 3 August 1983, Page 25

Apple and Pear Board to issue public debentures

To give the New Zealand Apple and Pear Board a long-term, strong financial base to cope with the capital requirements of the industry, the board has decided to establish a trust deed to allow it to issue secured debenture stock to depositors, delegates to the first pipfruit sector conference of the New Zealand Fruitgrowers’ Federation were told in Nelson yesterday, by Mr Rod Weir, chairman of the Apple and Pear Board’s finance committee. Mr Weir prefaced this announcement by saying that the board had a very detailed capital budget and cash flow for the next five years ($48.6 million) and a large amount of this could be financed from depreciation.

“Now the growers themselves are financing some of the capital development through the capital charge

which this year will bring in $2.6 million. We arranged last year a $l5 million rollover facility for three years and at present the board was in such a wonderfully strong financial position that it had no borrowings,” said Mr Weir. The board had assets of $BO million and liabilities of $3O million. It could, therefore, raise under its deed the difference, he said.

The trust deed would have a ratio of 1:20 — that is, it could borrow this percentage of its assets by the issue of debenture stock, said Mr Weir.

“There are many advantages, including perhaps the most important — the offering through a prospectus to the public, debenture stock for sums of money ranging from, say, one to ten years. As these sums mature, so moneys will be replaced with new debenture issues

every six months,” he said.

This would mean that the board would be able to go on financing the board’s capital requirements on a permanent basis, he said. One of the attractive aspects of the deed would be that the board could offer growers deposit rates which would be preferential and they would have a first class security secured on all the board’s assets, said Mr Weir.

The stock would be listed on the New Zealand Stock Exchange and would, therefore be negotiable. “So we plan to introduce this type of financing which is very common amongst listed public companies,” he said. Because the board was a highly respected organisation in the commercial world it would be strongly supported by institutions, insurance companies and others, he said.