Karl Gradon: Comvita CEO on the company's future after failed rich-lister takeover

New Zealand's largest mānuka honey producer's voted down a richlister takeover bid, leaving its fate in limbo. 

Comvita received an offer of 80-cents-per-share in August from Florenz - a subsidiary of Christchurch billionaire Mark Stewart’s Masthead Limited. 

Comvita CEO Karl Gradon explained how the company could bounce back.

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:16):
The official final result of the conveted takeover votes being
released and as expected, are not going to happen. This
is the proposed takeover by Florins. It's failed. Forty sorry,
fifty four point twenty nine percent of shareholders were in favor.
You need seventy five percent. A struggling minooka honey company
has to come up with a plan B pretty quick.
It's got sixty million dollars of debt right now that

(00:37):
needs to be repaid in the first quarter of next year.
Carl grayden is CEO with me now, Carl, good evening.

Speaker 3 (00:44):
Good evening, Thanks having me.

Speaker 2 (00:45):
So, what's the plan now? How are you going to
pay this debt?

Speaker 3 (00:49):
Well, the shareholders have spoken and at the end of
the day, we've now got a business as CEO that
I need to continue to hit the results and delivering
us the promises we've made. That's the first thing we
need to do. And the board is very clear that
they've now got to work with urgency, with both our
lenders and advice to deliver a plan big so as

(01:11):
you expect they have been thinking about this for quite
some time as a contingency, quite a thoughtful board, and
now the time is to act as a leadership team
to deliver on the results. And the board is entirely
focused on the recapitalization.

Speaker 2 (01:25):
You don't sound too worried about this. Is there a
risk the company's going to fall over?

Speaker 3 (01:31):
I think that there is always collaboration to be had
with our leading partners. We will be requiring equity going forwards,
and I think that as a result of that, we
need to be always thinking about the future scenarios. We
have a great brand, we have a great shareholder base,

(01:53):
and at the end of the day, we need to
continue to deliver on the promise. And the good thing
is in the last few months we have begun to
deliver against the potential of the brand and deliver what
we said we were going to do.

Speaker 2 (02:08):
No question about the brand. The brand is really strong.
How's that recapitalization going to work? Do you think?

Speaker 3 (02:15):
Well, I think it's a little bit early to actually
talk about that with any confidence. We're working alongside our
lending partners, We're working alongside the board to ensure that
all options continue to be explored. They have been working
on this for quite some time as a contingency, so
we'll be able to put it back to the INSIDEX

(02:37):
and to your listeners as soon as we have the
clarity on that. But so there is a lot of
work going on behind the scenes.

Speaker 2 (02:43):
What options are you talking about, Karl.

Speaker 3 (02:46):
Well, we will need to work alongside our lending partners.
We will need to go back out to market and
potentially work on a recapitalization plan, and with that recapitalization
comes a whole series of options which have not yet
been fully explored. So we'll be working with our advisors
and with our lenders to ensure that the brand is

(03:07):
able to thrive.

Speaker 2 (03:09):
Why is there an oversupply or a supply issue with
Honey at the moment?

Speaker 3 (03:17):
The post COVID situation really hit the industry quite hard.
We had an oversupply of honey coming out of the
aparies across the entire country. We had a surge in
hive numbers which have since reduced significantly, and as the

(03:37):
global market was looking for natural solutions to boost the community,
they looked to Monica Honey and that drove confidence that
would continue on that growth stored right at the time
as people were investing in additional hives. So now that
we're seeing the high numbers reduce and our sales rates increase,

(03:59):
we're actually confident that that is no longer going to
be the case. It will work through this glut of
honey we've had in the past, but it's still hanging
us and I think it will take a few months
for it to continue to flow through the system.

Speaker 2 (04:15):
And Conveter will be around for a long time yet well.

Speaker 3 (04:19):
Conveter is the number one brand globally in Manukahane. We
have the best distribution network globally. We have trusted partners
around the world, we have some great aparies, and we're
highly innovative with science based products. So when you're in
our position, it is our brand that has the reputation

(04:40):
and that's what we're going to continue to invest in.
And we love to be here for a very long time.
We've been here for fifty years and look to continue
to be here for another fifty.

Speaker 2 (04:47):
All right, Carl, Carl, appreciate your time tonight. Carl Graden,
Who's Convite our chief executive.

Speaker 1 (04:52):
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