Tough words for Waitaki directors

Press, 16 August 1988, Page 23

Tough words for Waitaki directors

Shareholders of Waitaki International yesterday approved moves to allow a merger of South Island meat interests, but not without dissent. Waitaki’s directors were criticised for their performance, especially by a former chairman and managing director of the meat group, Mr John Neilson, at an extraordinary meeting. Mr Neilson said that the director had insulted the status and intelligence of small minority shareholders by giving little useful, credible information.

The extraordinary meeting had been called to pass three ordinary resolutions, but the directors should have allowed a fourth resolution — the sale of the Finegand and Blenheim meatworks, and the shells of Islington and Burnside works.

No authority had been given for the sales and no information was given on a price, he said. "To be selling assets, Finegand especially, appals me— fine people and a fine profitable works. The sale of the family silver pales into relative insignificance.” On the resolution dealing with issuing 50M Waitaki shares to Fletcher Challenge, Mr Neilson said that some years ago Wattie’s overnight raid on Waitaki had proved a dismal outcome for both Waitaki and the meat industry. In spite of protestations, Wattie took its Waitaki holding to 60 per cent.

Fletcher Challenge’s excursion into the meat industry through Southland Frozen Meat, after the Commerce Commission declined Waitaki’s application to buy SFM, also had unhappy results. The full competitive philosophy of Treasury and the Government was applied, and so many had suffered — Challenge Meats (the Fletcher Challenge meat subsidiary) and Waitaki would have jointly lost more than SIOOM in the process, he said.

The Commission might well have started the cur-

rent debacle in the meat industry by approving the merger of Challenge and Waitaki. The move of the head office of Waitaki to Wellington, under the apparent domination of Fletcher Challenge, might hasten the demise of Waitaki.

Mr Neilson said that the move to buy Challenge Meats assets for S2IBM included an interest-free subordinated loan of SISOM, but the directors had not explained what this meant. A Waitaki director, Mr B. E. Brill, said that the loan was called subordinate because it had the lowest priority in the case of the winding up of the borrower. The loan was for a five-year term and denominated in sterling. Waitaki’s chairman, Mr Pat Goodman,, did not necessarily agree with what Mr Neilson had to say “but I respect that you said it.” What was important to all shareholders was that “we are now” among the two biggest public companies in the country which meant security for all, even for the minority shareholders. This was the greatest assurance that shareholders could have.

The sale of the Finegand and Blenheim meatworks to the Primary Producers’ Co-operative Society (PPCS) was - not being considered by the shareholders at this meeting, but was believed to be a necessary adjunct to improvement for Waitaki and others if Waitaki was

to be saved. "We’re fighting hard to ensure the continuation of the development, to get the glorious days of Waitaki back again.

“But it would not be achieved without changes in Government policy,” Mr Goodman said. The chairman of the Dairy Board, Mr Jim Graham, who said he was at the meeting to look after the interests of the board’s Goodman Fielder Wattie investment, considered the moves being considered by shareholders to be “good, sound commercial sense” in the meat industry in the South Island. The inove was necessary because of the drop in the lamb kill from 39M to 26M, and it was only the first stage after four or five companies had sat on the fence saying “not me” to necessary changes. In reply to a shareholder’s question about Fletcher Challenge not liking being in a minority situation in a company, Mr Goodman replied that neither did his company but because of the gravity of the situation both he and Mr Hugh Fletcher (chief executive of Fletcher Challenge) considered it necessary. The motion was passed on a show of hands after voices were considered equal, and a motion to increase Waitaki’s authorised capital to SISOM was also passed.

The third motion to increase the number of directors from 11 to 14 through three Fletcher re-

presentatives being appointed also ran into opposition. Mr Neilson said “while over 2000 staff members and meatworkers are ‘sent down the road’ by the directors, the latter seek an increase in their numbers. It shows neither a practical approach nor feelings for others.” There was no virtue in increased numbers. It meant increased costs, expenses, and time. “No director has resigned even as a gesture of acceptance of any culpability in the near demise of the company,” he said. Mr Goodman said that the board was a big one, but it required these people. He assured shareholders that there would be no increase in directors’ fees, and he said that at one stage his firm had 18 directors which was reduced to seven in three years, while Fletcher Challenge had had 22 which was now down to 13.

In direct reply to Mr Neilson, Mr Goodman said that “We would want to get that (number of directors) down, so I’m agreeing with you really for the first time today.” The motion was also passed by a show of hands.

The approval of the issue of shares to Fletcher Challenge means that both it and Goodman Fielder Wattie each hold 29 per cent of Waitaki, Freesia Finance, the investment arm of the Meat Producers’ Board, 14 per cent and minority shareholders, 28 per cent.