Targeted share offer and buy-back strengthens ownership and alignment

Media Release - 05 November 2018

Zespri has made good progress in strengthening alignment and grower ownership and control of the company through a targeted share offer and buy-back programme.

The offer closed on 19 October and Zespri has accepted 427 applications to purchase over 12 million shares for a total of over $95 million. Participation was open to growers who do not own shares and to growers who hold less than one share per tray of their production. Over half of the applications were from previously unshared growers and the percentage of total shares in Zespri held by growers has increased to 85 percent.

The capital raised through the share offer enables Zespri to fund in full a buy-back programme from eligible shareholders. This was targeted at shareholders who no longer produce kiwifruit and shareholders who are ‘over-aligned’, meaning that they hold over 1.5 shares per tray of production and over. There were 257 applications for the buy-back involving nearly 9 million shares for a total of over $70 million. The number of former growers holding Zespri shares has reduced by 30 percent.

Zespri Chairman Peter McBride says that the share offer and buy-back programme is a milestone in a long-term project to strengthen the industry’s foundations. Together with changes made to the Zespri Constitution in March this year, the programme addresses a problem of growing misalignment between growers who supply kiwifruit to Zespri and people who own shares in Zespri.

“A significant number of New Zealand kiwifruit orchard owners do not own Zespri shares and over 18 million shares were held by people who have left the industry,” explains Mr McBride. “Through this share offer, a good number of growers have taken up the opportunity to either become shareholders in Zespri or to increase their shareholdings in line with their entitlements.

“Share ownership gives producers the opportunity to benefit financially as both growers and shareholders, from fruit payments and via the corporate income stream. Ownership also gives growers a greater influence over the direction of their kiwifruit marketer. The share offer and the buy-back together represent significant progress in our objective to strengthen ownership and alignment.”

The buy-back programme gave eligible shareholders an effective option to sell shares, without broker fees. Take-up of the share offer and buy-back offer by shareholders was voluntary. The share offer and buy-back were at the same price of $8.00 per share, determined by Zespri’s Board on the basis of an independent valuation.

Background information on the targeted share offer and buy-back programme

  • The share offer and buy-back programme was approved by shareholders in March 2018 as a tool to improve alignment between shareholding and production.
  • The share offer and buy-back followed a number of changes to the Zespri Constitution, supported by shareholders in March 2018. This was on the back of an extensive strategy review and consultation by the kiwifruit industry that began in 2013, called the Kiwifruit Industry Strategy Project (KISP).
  • Two-thirds of growers, representing 80 percent of production, voted in the KISP referendum which set out recommendations for the industry. Some 92 percent of growers who voted supported the KISP recommendations on measures to improve alignment between total production and grower shareholding.
  • The New Zealand Government subsequently approved amendments to the Kiwifruit Export Regulations, enabling Zespri to propose changes to its constitution. It was the first major review of the regulations since they were put in place 18 years ago.

About Zespri Group Ltd

With global kiwifruit sales revenues of $2.39 billion in 2017/18, Zespri is one of the world’s most successful horticulture marketing companies and the Zespri brand is recognised as the world leader in premium quality kiwifruit. Based in Mount Maunganui, New Zealand, we are 100 percent owned by current or past kiwifruit growers, and employ around 500 people in New Zealand, Asia, Europe and the Americas. On behalf of our approximately 2,500 growers in New Zealand and approximately 1,350 growers based elsewhere, Zespri manages kiwifruit innovation and supply management, distribution management and marketing of Zespri Green, Zespri SunGold, Zespri Organic Green, Zespri Organic SunGold, Zespri Gold and Zespri Sweet Green Kiwifruit.

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