Bay of Plenty Business News April/May 2018

10 BAY OF PLENTY BUSINESS NEWS April/May 2018
Seeka buys $40 million T&G
assets after exiting Zespri
Seeka - one of New Zealand’s largest corporate kiwifruit growers
and processors - has cemented its scale in the industry with
the recent $40 million purchase of T&G Global’s packhouse and
orchard assets in Northland.
By RICHARD RENNIE
Coming less than a month
after Seeka exited its
shares in global marketing
company Zespri to
the tune of $6.11 million, the
Northland move sees the Te
Puke-headquartered company
expand its multi-fruit storage
facilities, with post-harvest
facilities in Kerikeri capable of
packing and storing avocados,
kiwifruit and citrus fruit.
Seeka chief executive
Michael Franks said the company
had identified Northland
as a growth region for its
two key crops, avocados and
kiwifruit.
“Establishing a post-harvest
hub in Northland has been
a priority,” he said.
The sale by T&G (originally
known as Turners and
Growers) includes 80 ha of
Northland kiwifruit interests.
And interestingly, given
Seeka’s exit from its Zespri
holding, it also includes $2
million worth of T&G’s shares
in Zespri. All staff in the
Northland facility are to be
kept on.
Seeka, which with its holdings
across the Tasman is the
biggest kiwifruit grower in
Australasia, is continuing its
investment in a range of fruit
varieties.
This now also includes
apricots grown in Victoria
Australia, banana imports
from Ecuador, and the new
GEM variety of avocados,
and kiwiberries in the Bay
of Plenty.
The Northland region has
been a focus of new avocado
plantings in the past two years,
including some significant corporate
investment.
Franks said demand for
post-harvest facilities in the
region was expected to grow,
while favourable kiwifruit
growing conditions for the
SunGold variety in particular
were expected to push demand
for facilities even further.
Franks said he was confident
Seeka’s presence would
bring a new competitive element
to the post-harvest market
in Northland, focusing on
quality, price and service.
Avocado NZ data indicates
there is 3700 ha of land
in avocados, largely around
Northland and Bay of Plenty,
but the new plantings in
Northland are expected to add
an additional 850 ha to that.
T&G’s executive general
manager for New Zealand
Andrew Keaney said the company
has expressly left out its
citrus and berry crops grown in
Northland.
“We intend investing further
in these growth categories
- we have land ready for
development.”
In early April Seeka opted
to sell out its 740,646 shares
in Zespri, netting the kiwifruit
grower and processor $6.11
million in the process.
The decision came in the
wake of major constitutional
changes Zespri made in March
(see Bay of Plenty Business
News – March issue), approved
with 75 percent shareholder
support. These changes aimed
to re-align Zespri’s share-holding
to better reflect grower
production contribution to the
marketer.
With annual orchard production
of 8.45 million trays in
2017, Seeka’s shareholding sat
firmly at the “under-shared”
end of the spectrum.
Franks said the $6.1 million
freed up represented a reasonable
sum of cash that could be
put to better use to help reduce
the company’s relatively sizable
debt load.
“We were never happy
with the constitutional changes
around the share allocation,”
he said.
“But the fact was we were
making the investment up
north, and that made it sensible
to exit the shares.”
The 2017 annual report
indicates as a result of significant
capital investment Seeka
had increased its net debt to
$83 million, a jump of $10
million on the year before.
Total assets had however
also increased from $197 million
to $222 million.
It is as yet unclear whether
Seeka will dispose of the
$2 million in Zespri shares
acquired through the T&G deal.
The Zespri constitutional
changes enabled the minority
shareholders, including Seeka,
to exercise their buyout rights
to be paid $8.25 a share.
This was well within the
$8-$9 share valuation range
proposed by valuers and a nine
percent premium on Zespri’s
last trading price.
Seeka has expressed concern
in the past about the industry’s
lack of pace in developing
offshore fruit handling
facilities and what it described
in its 2016 annual report as a
“minimal” approach to collaborative
marketing.
Seeka’s own shares continue
to trade strongly on the
market, up 18 percent on the
NZX on a year ago, just ahead
of the NZX 50 average gain of
16 percent.
David Courtney, Zespri general
manager for external and
grower relations said it was still
too early to tell if there would
be many producing growers
that had decided to sell out their
share ownership.
He said there had not been
much movement in share ownership
to date after the March
15 changes. A full share buyback
is scheduled for the end
of this year.