British plant closes to help lower debt

Silver Fern Farms has closed a British frozen meat processing facility as part of consolidation that will see SFF debt reduce significantly to $100 million by September 31.

Chief executive Keith Cooper yesterday announced the wind-up of Silver Fern Farms' Brooks operation on the outskirts of Norwich with the loss of 64 jobs. He said the redundancies in the frozen meats operation would cost SFF "a few hundred thousand" in payouts.

In 2007 SFF had debt of $325m, and by September 31, 2010 that debt would be down to $100m, Mr Cooper said. Since 2007 it had sold non-core assets to the value of $56m.

SFF's equity ratio (indicating the relative proportion of equity used to finance a company's assets) had improved to 70 per cent from 25 per cent in 2007. Plant closures have been part of that cutting of debt.

Mr Cooper said SFF took full ownership of the Norwich operation in 1998 at a time when New Zealand was sending significant volumes of frozen carcasses to Britain for further processing.

The Brooks plant was sold by SFF two years ago and a smaller cutting room had been operating under a lease arrangement since then, with chilled lamb exports from New Zealand growing at the 20 per cent level.

In New Zealand plant closures had also been part of SFF's move to realign itself with declining stock numbers as farmers switched in "droves" into the lucrative dairy industry.

The company's annual turnover would fall to $1.9 billion in the September 2010 financial year from $2b in the prior financial year.

Currency fluctuations were the biggest impact on that turnover with high kiwi dollar (15 per cent to 20 per cent above a year ago) undermining farmer returns, Mr Cooper said.

The company was working on "four options" around the need to repay $75m in bonds which were due to mature on December 15.

"We're currently evaluating four choices as to how we handle that."

- © Fairfax NZ News