Silver Fern Farms works on funding replacement for $75m bonds

Meat processor Silver Fern Farms is working on replacement funding for an existing $75 million of bonds.

The $75m tranche is due to mature in December and the meat processing co-operative is mulling options including a further bond issue or alternative funding from banks.

SFF had about $184.5m of debt at August 31. It needs capital or further facilities to help pay debt that is rolling over and to continue its farm-pasture-to-customer-plate marketing strategy.

SFF's previous capital-raising plan ended with a splutter rather than a surge with farmer suppliers only ploughing in about $22m of new equity, much less than originally envisaged.

Chief executive Keith Cooper did not specify any plans for SFF to tap "partners" or new shareholders for further funds.

He said the SFF finance team was working through debt-related options including existing bank facilities.

"The bond [maturity] is out there on the horizon and we're obviously refinancing ...

"We've got normal financing sources – the normal capital market channels, the banks, the option of another bond. There's a variety of mechanisms we can use to refinance it."

SFF's export focus includes selling new chilled lamb packages into the Intermarche supermarket chain in France.

The South Island processor had a soft marketing campaign for the lamb packages in October backed by some of the hard men of All Blacks rugby – Ma'a Nonu, Andrew Hore and Tony Woodcock – in some of the French stores in October.

Mr Cooper said yesterday that the retail-ready, labelled New Zealand lamb had initially gone into about 40 Intermarche stores in the Paris region in October, although SFF had taken into account the busy Christmas shopping period, which would interrupt the associated marketing strategy. "We had a bit of a devil and the deep blue sea situation. If we didn't do it in October then we wouldn't be able to do it until about now [March]," Mr Cooper said.

SFF was now working on "real work" with Intermarche to roll out packaged lamb to other stores.

It was estimated that by next month the meat packages would be in between 70 and 105 supermarkets, some outside Paris, increasing to between 150 and 225 in May.

SFF's logistics team from France had visited New Zealand recently and reported the supermarket campaign was gaining momentum, he said. The New Zealand lamb season had been delayed during a season where it had been predicted that one million more lambs than last year would be processed to bring the total to about 23 million.

"But the season has been very slow because the farmers have grass. As of a week ago we were 1.5 million lambs behind compared with last year," Mr Cooper said.

"The danger of that is we [will be] killing them out of the traditional peak time ... because the farmers are growing them heavier we run the risk we may be producing too many at the one time and at the too-heavy weight for market requirements."

- © Fairfax NZ News