We have planned and consulted with the industry on a targeted share offer and buy-back for sometime, with the intent of trying to improve alignment of current producers and shareholders. We will proceed with the planned share offer that targets under-shared (under one share per tray of historical production) and unshared growers, and the planned buy-back from overaligned shareholders and dry (ex-grower) shareholders.
Over-aligned shareholders for the purposes of the buy-back will be shareholders that hold more than one share per tray of historical production plus a margin which satisfies the tax tests for reduction of shareholding interests on a tax free basis (subject to individual circumstances).
The share offer and buy-back will be at the same price, and the issuer and offeror of the shares is Zespri Group Limited. This price was determined by Zespri’s Board on the basis of an independent valuation. As Zespri will be paying out a dividend shortly before the offer documents are issued, the price offered will be ex-dividend.
Growers entitled to participate should regularly check this website page for updated information and relevant forms.
The Product Disclosure Statement (PDS) for the share offer has been lodged with the Registrar of Financial Service Providers. A link to the PDS is set out below. You are also encouraged to read the Disclose Register which contains further material information and is available here. (Click 'Search Offers' and enter this number: OFR12458). For the buy-back, there will be a buy-back disclosure document and application form issued. The issuer and the offeror of the new shares and treasury shares is Zespri Group Limited.
Product Disclosure Statement
Buy-Back Disclosure Document
A link to a summary of Cameron Partners Limited’s report to the Board of Zespri to assist the Board to establish a price for the share offer and the buy-back is set out below. This is only one of the many other documents available on the Disclose Register for shareholders and growers to review.
Cameron Partners Limited Summary Report
Targeted Share Offer and Buy-Back: Funds not withdrawn until 19 Oct 2018
For those growers and shareholders that have received a letter of entitlement giving them an offer to either buy shares from Zespri or sell shares back to Zespri, if you want to take it up in full or in part, please ensure your application form with either direct debit form completed or accompanied by a cheque is sent to Computershare so that it arrives no later than 5pm Friday 19 October 2018. Applications received after this time and date will not be accepted.
The payment for growers/shareholders buying shares from Zespri will not be direct debited from your account, and cheques will not be deposited with the bank, until the afternoon of 19 October, so you can send in your application form at any time before then with the relevant direct debit form completed or with a cheque but don’t need to have the funds in your account until that day. So please ensure that if you wish to take up the offers, you send these to Computershare well in advance.
Computershare’s contact details for application forms and payment queries is 09 4888 777.
Sometimes we are asked why growers should consider owning shares in Zespri. There are a number of reasons that you should consider when making a decision, including:
- promoting the ownership and control of the industry marketing body (Zespri) by the growers whose kiwifruit it sells
- improving Zespri’s ability to remain (in the majority) truly representative of kiwifruit growers when it lobbies Government on behalf of the industry and represents the industry overseas
- The ability to share in corporate income streams (through dividends) as well as orchard gate returns (OGR).
All of these reasons come down to one concept, alignment of grower interests and shareholder interests to make the industry stronger.
When Zespri was corporatised in 2000, all exporting growers were allotted shares. At that point in time, there was near perfect alignment of interests. While other primary industry groups that have had a single desk exporter have been set up as a cooperative in a way that ensured only those that participate in the industry have the shares, the Government did not set Zespri up that way. This has led to a growing mis-alignment and resulted in some of the recommendations growers voted for in the KISP referendum and subsequent Special Meeting.
Aligning grower and shareholder interests helps to ensure that when the company fulfils its obligations both as a purchaser and on-seller of kiwifruit and as a company with duties to its shareholders, those obligations are fundamentally the same. The more that growers and shareholders are not the same people, then the interests of a grower may focus more singularly on its OGR, and the interests of the shareholder (who may or may not still be a grower) will be focused on a return on investment by way of dividends.
If we take the example of PVR licensing, growers purchase the licence for various reasons but often to diversify their portfolio and improve their returns on their orchard; shareholders share in the return on investment the company has made from investing in developing PVRs. If the grower is also a shareholder they can benefit from both sides of the equation.
Another example is Zespri’s 12-month supply business (ZGS). As explained in the PDS, ZGS is the segment of the company that focuses on procuring or growing Zespri branded fruit in the Northern Hemisphere in order to fill shelf space in between the NZ supply windows. The ZGS business plays a big part in ensuring Zespri’s brand stays in customers’ minds and on shelves 12-months in the year. The ZGS business includes returns from the buying and on-sale of fruit grown in Europe and Asia, and royalty incomes from SunGold. Income from the ZGS business is company income, so shareholders also have an interest in how well it does.
Please note that the comments above reflect our views as to the importance of the Zespri ownership model for the industry in New Zealand. Zespri cannot, and does not, give any recommendation or opinion as to whether any person should buy or sell Zespri shares. If you are contemplating buying or selling Zespri shares, you should seek advice from a financial advisor or other professional.
You can learn more about the targeted share offer from articles in recent Kiwifliers: