Alliance Group is urging shareholders to vote to accept a $250 million investment, saying if they do not, the company risks insolvency due to the level of debt.
The red meat cooperative released more details on Thursday about the proposed investment by Irish-based Dawn Meat Groups ahead of a vote by farmers next month.
Dawn Meats Group proposes to buy a 65 percent stake for $250m. It is one of Europe’s largest meat processors with annual revenue of $5.8 billion.
Group chairman Mark Wynne encouraged farmers to read the new booklet that features financial, operational and governance information to help them make an informed decision on the proposal.
An independent advisory report by Northington Partners also assessed the midpoint of Dawn Meats’ investment at a $1.18 per share.
Wynne said the report was clear that alternative investment options were very limited.
“So the Northington Partners report is very black and white, that this is a good proposal for shareholders.
“It represents a 93 percent uplift on the midpoint share value for current Alliance, versus Alliance post-investment.
“So that’s good news, but they also look at the alternative and say if it is not a yes vote, that process looks pretty dark and could result in insolvency.”
The report showed Alliance could pursue asset sales, site closures or large cost reductions – it could attempt to raise capital from shareholders or other investors, or face insolvency.
Outside of helping the coop’s financial position, Wynne said Dawn Meats had plenty to offer.
“The deal that we have on the table is a really, really positive deal.
“Not only does it solve our financial balance sheet challenge, but it also brings a great partner in Dawn Meats to the table where there is a lot of benefits beyond just the financials.
“So they are strong in beef, we are strong in lamb, they are strong in UK and Europe, we are strong in North America and China.
The shareholder vote outcome will be announced on October 21.
