Targeted Share Offer

We have planned and consulted with the industry on a targeted share issue 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 issue that targets under-shared (under one share per tray of production) and unshared growers, and the planned buy-back from over-shared shareholders and dry (ex-grower) shareholders.

Over-shared shareholders for the purposes of the buy-back will be shareholders that hold more than one share per tray of production plus a margin which satisfies the tax tests for reduction of shareholding interests on a tax free basis.

The share issue and buy-back will be at the same price. This price will be 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.

There will be a product disclosure statement for the share issue and a straight-forward application form. For the buy-back, there will be a buy-back offer document and application form issued.

Why own shares in Zespri?

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:

  • Ensuring that the industry marketing body (Zespri) is owned and controlled by the growers whose kiwifruit it sells
  • Ensuring Zespri remains (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 last month’s Kiwiflier, 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. If customer demand for Zespri product remains high, then during the NZ season, growers benefit from the improved OGR. 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.

One of the other major factors that is important to this industry is its unity as a group in advocacy to the Government. Alignment helps to make the case to retain and strengthen the Single Point of Entry structure, and in doing so maximise the benefit for both New Zealand kiwifruit growers and shareholders.  ​

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.

Important information on new developments

Zespri is starting a registration process to identify new plantings and developments so we can identify growers who don’t own shares or are undershared (less than 1:1) and wish to take part in a share offer planned for later this year. Registering will not mean growers must take any shares that may be offered, but will give those growers who meet the criteria the opportunity to take part if they want to.

The targeted share offer, and who is eligible, will be outlined once the due diligence is completed, and the details of the proposed share offer are available. The new plantings and development registration process will involve completing the Registration of New Plantings or Developments form and supplying a supporting GPS map no less than two years old. New plantings or developments may be subject to an on-orchard visit by a Zespri representative.

Definitions are provided below:

New Planter: a grower already known to Zespri who has made new plantings since 1 January 2015 of 0.5 contiguous (adjoining) hectares or more and is not yet in full production in relation to those new plantings. The area subject to the new planting will be allocated an assumed production figure.

  • Assumed production Green = 10,500 trays per hectare
  • Assumed production Gold = 14,000 trays per hectare


New Developer: a grower already known to Zespri who may have a new block or Kiwifruit Property Identification Number (KPIN) that they are preparing for development. This may include bare land, structures only or rootstock. The area subject to the new planting will be allocated the same assumed production figure.

  • Assumed production Green = 10,500 trays per hectare (unless the grower has a Gold PVR licence, in which case it is 14,000 trays per hectare)

New Entrants: with greenfields are slightly different. These are growers who are completely new to the industry (identified by a legal entity name) and have no other orchards in the legal entity name in which they own their greenfields. The greenfield site has not produced kiwifruit for supply to Zespri in the last five years. A “deemed production” rule is defined by the Constitution and determines the new entrants’ eligibility to purchase shares. If you consider you fall into this classification please contact the Grower Support Services team to register as a grower and register for a KPIN if you have not already done so. You will then become eligible for deemed production, and an entitlement to be allocated to you in the share offer.

  • Deemed production = regional average per hectare across all varieties

What do I need to do?

  • If you think you may have eligible new plantings or developments and you are undershared (i.e. your shareholding is less than your production), you need to complete the Registration of New Plantings/Development form available for download below. This also includes growers who do not own any shares in the same name as their orchard.
  • Complete one form per KPIN. 
  • If you don’t already have a recent map (less than two years old) that designates the new plantings/development, you may need to arrange for one. Details of approved mapping providers are listed at the bottom of the form.
  • Return your registration form and map to Zespri by Friday 27 July. You can scan and email copies to shares@zespri.com or post them to the address set out in the form.

No money is currently being sought. Financial products (i.e. Zespri shares) cannot currently be applied for or acquired under the proposed share issue nor sold to Zespri under the proposed buy-back. If the share issue and buy-back are offered, they will be implemented in accordance with the Financial Markets Conduct Act 2013 and the Companies Act 1993. No expressions of interest are currently being sought and this process is only being conducted for the purposes of assessing eligibility to participate in the proposed share issue. By responding with the form in the links below you are not bound to participate in the proposed share offer or buy-back. Similarly, Zespri does not undertake to proceed with the share issue and/or buy-back.

Documents:


You can learn more about the targeted share offer and registering your new plantings and developments from articles in recent Kiwifliers. See below.