Devco creditors still undecided

Press, 25 August 1986, Page 26

Devco creditors still undecided

PA Wellington Devco the meat exporter remains confident it can trade its way out of trouble, but its major creditors have yet to agree to a gradual payback plan to keep the company in business. The chairman, Mr Ron Cushen said that he was still waiting for two creditors to reply to proposals the company put forward nearly three weeks ago on how it could pay back the $33 million it owes.

Nothing was final till all the replies were in, but the other creditors, including 50 per cent Devco shareholder, the Meat Board, which is owed $2O million, had given a favourable response to the company’s plans, he said. All Devco’s debt was more than covered by stock, in hand from last year’s export kill, and what was now needed was

creditors’ approval. Mr Cushen said the company had made a $2 million profit during the first six months trading this year which showed “loose” criticism of Devco’s marketing was unjustified. In addition to its financial woes Devco is till under a cloud over a United States Department of Agriculture investigation into possible trading malpractices. And the Meat Board announced on Thursday it would review the development status of the North American market which has given Devco sole export rights for the last 25 years.

The board has set up a complex review structure, and will not announce results until December. But farmer representatives at the board’s electoral committee meeting in Wellington last week

were vocal in their criticism of Devco’s continued monopoly.

Mr Aubrey Begg (Southland) said 25 years of protection had produced poor results and Devco needed to face competition.

However, the likely contenders are the same meat companies that Devco owes money.

Mr Cushen said that most of Devco’s stocks of lamb meat were cut to specific United States specifications, and could not be easily traded with other markets. But the debt position was such any creditor could probably successfully call for the private company to be wound up. Winding up the company would take a long time, and without a licensed seller to the North American market, Devco’s stocks would lose much of their value.