Aquarius this week. Hewitt was responding to calls from shareholders opposed to the deal to look at alternative funding, which could keep New Zealand’s biggest meat company in local hands. The cooperative that now owns SFF would be showered in cash if the Chinese deal goes ahead. As well as $261 million that would be injected into the business, leaving it debt free with funds to upgrade plant and pursue global growth ambitions, the farmers will get a dividend of 30 cents a share, or $35 million, and the cooperative’s board would get $7 million for its costs – enough to keep it going for seven years at current rates. SFF shareholder, John Cochrane, last week floated an alternative plan to raise $90 million in a rights issue underwritten by local agri-businesses, a strategy he claimed would cost the average farmer $25,000. But Hewitt said SFF did not know who was backing Cochrane’s plan or what control they would demand in the event farmers did not take up all their rights to new shares. “We would be entering a state of financial uncertainty in the event that this is voted down by shareholders,” Hewitt said. “For John to suggest we stare the banks down – it’s a dangerous game.” Hewitt said while SFF had made progress repaying debt and improving the performance of the meat company, “the challenge is we have a banking syndicate which is tired.” The board agrees with lenders that the company needs to put some extra equity into the business “and we are not confident we will get that amount of equity from existing shareholders”. Debt has plagues Silver Fern Farms over the past decade. After the Hawkes Bay’s Richmond Meats 2006 takeover it grew to about $350 million to $400 million. It then decreased back to around $115 million before increasing to $380 million when the sheep meat market collapsed. Former SFF director, Richard Somerville, another opponent of the sale, issued a statement over the weekend urging farmers to reject the Shanghai Maling deal and not cede control of their company. “PPCS (SFF’s previous name) was founded in an environment where UK interests dominated the NZ meat processing industry at a significant cost to NZ suppliers,” Somerville said. “Why would you take the risks of moving from one colonial master to another?” While Westpac Banking Corp and Rabobank are understood to be willing to continue to provide a debt facility to SFF, HSBC and Commonwealth Bank of Australia are said to be less keen. “The call for acceptance of the Shanghai Maling offer is not driven by debt but by the desire by two of the banking syndicates wishing to exit their exposure to SFF,” Somerville said. “We understand SFF has an offer from a reputable bank to provide a facility to rank alongside Westpac and Rabo and take out the one, or possibly two, banks wishing to exit and that this offer is conditional upon SFF raising new equity in the region of $80-$100 million. That would require farmers to support a rights issue,” he said. Hewitt said shareholders shouldn’t be concerned that under the deal Shanghai Maling’s co-chair will get a casting vote on governance issues, including the meat company’s budget and appointment of the CEO, saying the Chinese company had insisted on this for its own accounting requirements in China and the venture would be “a genuine partnership, straight down the middle”. He said if supplier shareholders were unhappy with the use of the casting vote, “they could withhold their livestock and then the company is worthless.” Hewitt also defended the $7 million Shanghai Maling would contribute to the cooperative’s board for governance costs should the deal go ahead. The cooperative would still have a board of directors after the sale, although it would not be overseeing the company in the same way, with just a 50 per cent holding. He said the coop board would still have costs including travel, running election processes every year and continuing with its governance development program. Based on the current board costs, the $7 million would keep the board operating for seven years. Wednesday October 14 is the last day shareholders can lodge proxies and internet votes ahead of the October 16 special meeting in Dunedin. According to Ian Macintosh, CEO of Cooperative Business New Zealand (CBNZ), co-operatives are no longer is immune from outside interests. This is because their member base and debt facilities are not longer sufficient to enable them to fully participate in an increasingly global food market. NZ has the highest number of cooperatives per capita in the world  with the combined turnover of CBNZ’s top 40 members coming in at $40 billion last year. (BusinessDesk)