Leading Te Puke-based kiwifruit grower-packer Seeka will relinquish its shareholdings in Opotiki Packing and Cool Storage (Opac), according to Business Desk.
Pending shareholder approval, the NZ$3.2m (US$2.7m) deal will see Opac buy back the 20 per cent stake it sold to Seeka in 2005 for NZ$3.7m (US$3.1m). Seeka had expressed interest in buying the kiwifruit cold storage specialist outright before the outbreak of the bacterial vine-killing disease Psa in 2010.
Seeka chief executive Michael Franks said the sale was part of Seeka’s post-harvest strategy, which has focused on the sale of non-core assets and the reduction of debt.
“We've had Psa, which actually wiped out Opac's investment in Italy, and now in the cold light of day we've taken a breath and thought about things and figured that perhaps it's not consistent anymore,” Franks told Business Desk.
“It's more a strategy-based sale than a profitability-based decision. They've got to bring value to our shareholders, they've got to earn their cost of capital, they've got to be consistent with our strategy, and we've got to be able to add value to those companies or those investors.”
Opac’s net profit fell to NZ$610,000 (US$515,853) in 2013, a decline of 81 percent from the previous year, while sales were down 24 per cent to NZ$24m (US$20m). Franks described the sale price as “higher than book value.”
Seeka’s own net profit fell from NZ$5.8m (US$4.8m) in 2012 to NZ$2.7m (US$2.3m) in 2013, although this was an improvement on the forecast range the company had issued last October of between NZ$1.7m-NZ$2.2m (US$1.4m-US$1.8m).
