A difficult era in the history of the meat company Silver Fern Farms will end with the repayment ahead of schedule of $75 million in bonds.
The NZDX-listed five-year bonds were due to mature on December 15, but co-operative chairman Eoin Garden said a strong balance sheet and a new banking syndicate had allowed the early settlement.
Chief executive Keith Cooper said repayment of bonds brought to an end a difficult era for the company since 2003.
"It brings closure to a difficult period."
He was referring to the period since the purchase of Hawkes Bay meat company Richmond.
Debt associated with the Richmond deal and the need to address the subsequent surplus processing capacity had impacted on the company's financial performance.
The company was no longer distracted by having to improve its balance sheet and restructure processing capacity.
"It means we are now absolutely focused on the strategic direction of the company," he said. The company was still to announce its annual result, but Mr Garden said the equity ratio at its September 30 balance date would be about 70%, with debt of $118 million.
A year ago equity was 52% and debt $183 million, but in 2007 equity fell as low as 35.2% and debt peaked at $334 million.
Mr Garden said having a new banking syndicate of Rabobank, HSBC, Westpac and CBA was a vote of confidence in the company's plate-to-pasture integrated supply chain strategy.
"During the past two years, Silver Fern Farms has reduced its working capital by improving debtor management and decreasing inventory.
"Put simply, we are running the business more efficiently and therefore require less working capital. This has allowed us to repay debt and reduce our interest cost," Mr Garden said.
The bonds will be repaid on November 15 and have a coupon rate of 10.25%.
