The Country 19/09/25: Riley Kennedy talks to Jamie Mackay

“Very real.” That’s how Mark Wynne, chair of Alliance Group, describes the threat of the processor collapsing if the proposed deal with Dawn Meats fails. It is just over a month until the processor’s current farmer-shareholders will vote on what is effectively a $250 million bailout to repay its working capital. We catch up with a senior journalist at BusinessDesk to find out more.

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Episode Transcript

Speaker 1 (00:00):
One thing we do in this country, and my humble
opinion is a lack of good rural journalists. We just
don't get enough coverage, or I don't reckon we do.
And I'm talking about print here, not radio. Of course,
there's some outstanding candidates there, but this man is the
exception to the rule. He's doing a great job at
Business Desk. His name is Riley Kennedy. And Riley, you've

(00:20):
written a really interesting piece on the Alliance vote which
is coming up next month. And basically, for Alliance Farmer shareholders,
this is just a choice, or a matter of Hobson's choice.
There is no alternative. Take it or leave it? What
do you reckon?

Speaker 2 (00:36):
Yeah, well, thank you for your come words. But there
I can tell you that there will not be an
insolvency practitioner in this country, so they will want to
get their hands on this job. That they're basically pulling
Alliance apart, and that is a very real threat that
I think everyone needs to consider as the dawn falls over.

Speaker 1 (00:58):
Well very real. That's ol Markwin, chair of the Alliance Group,
describes the threat of the processor collapsing if the proposed
deal with Dawn Meets fails they've just run out of money,
They've run out of rope, and yesterday they sent current
Farmers shareholders the booklet. I think they have to vote
later next month. What's the feeling on the ground, because

(01:21):
I know there's a group of very high profile farmers,
well held farmers, who were maybe thinking of staging a
rare action and saving the Alliance and keeping it one
hundred percent farmer own. But are they tilting at a windmill?
Have you?

Speaker 2 (01:37):
You know, if you've got a bit of time over
the week and you spend a good couple of hours
reading the whole booklet, which is about seventy three pages long,
it makes a good bed time reading. Basically, the Independent
report says, good luck finding another deal period. You know,
I mean the current alliance she holders are more than
entitles to try and pull together a another deal. You know,

(02:01):
they think they can recapitalize it, then why not? No?
I mean make when I think he said they're opened
even looking at it. But right now they've got to
go with the Dawn deal. Ultimately, the board might think
it's a good idea, you know, to recapitalize it themselves,
but the process is being run by the bank they're
going to have to convince the banks that they should
basically ditch the process. To date, we're running up against

(02:24):
the deadline of October twenty. That's when the special meeting
is an over cargo. You're going to have to come
up with a deal quick, convince the bank. So it's
a good idea and basically restart the process.

Speaker 1 (02:36):
And we're talking, we're talking. We're talking big numbers, aren't
were door meets have offered what two hundred and fifty
million dollars for a sixty five percent share in the business.
That's just off the top of my head. That's the numbers,
isn't it.

Speaker 2 (02:48):
Yeah, And the lines has to pay back up to
two hundred million to the bank this year. The threat
of insolvency, it's very rare, but it's not uncommon. Last
year suddenly, I think it was probably almost a year
this week that we're at Dunkendal, you know, watching that
deal go down. That that was also the same position.

(03:09):
They had to pay back the banks and if they
didn't pay back the banks and the receivers were going
to be occupying the boardroom on Monday morning. And some
would say, you know, maybe the meat industry is better
off with a lance you know that is often some
people do so that, but also you do on Pride
itself on red meat. It's a very good look of

(03:30):
one of our processes for wor Well, our.

Speaker 1 (03:32):
Second biggest processor behind Silver Fern Farms, exactly so effectively
that the shareholders have to vote on October the twentieth
time is running out for an alternative offer. We're hearing,
as I say, whispers of one on the one but
as you quite rightly point out, logistically, it's going to
be very very challenging. How did a once mighty farm,

(03:55):
our own one hundred percent farm, our own cooperative get
into such a financial mess?

Speaker 2 (04:00):
Yeah. The the problem is with Alliance that it's run
on a banking facility that inspires every twelve twelve months.
So in the twelve months I've got to pay down
all their debt and restart. And of course we all
know that the procurement for lifestock is ultra competitors at
the moment. I think that's even how Mark when described it.

(04:21):
And so when you have to pay your farmers within
two weeks, most processes will pay within seven to two weeks,
seven days to two weeks and then you kill that
live stock, but you're not getting paid from their customer
when the when the stock has a planned so there's
a gap of sometimes a couple of months, so red

(04:42):
meat companies have to borrow the money to tie them
over until the stock essentially put on a container and
put on a boat. And when you're having to pay
a lot for stock, you're going to have to borrow more.
And it's just a just a revolving cycle. Really.

Speaker 1 (04:59):
They are corny is riley at the moment. With record
high red meat prices, it makes doing business as a
red meat processor even more difficult and as you point out,
it as a red hot procurement market and they will
be scrapping over the red meat scraps. I shouldn't say
scraps because it's a brilliant product, but they're going to
be scrapping over red meat this season.

Speaker 2 (05:22):
Yeah, it is is. It just keeps getting more and
more competitive, which is a good thing. You know, you
wouldn't want it to be, particularly for farmers. You wouldn't
want it to be any other way. But it does
make it very tough for red meat processes when they
are having to go out and buy the live stock
and then try and sell it in a market that

(05:42):
is ultimately demanding good prices, but their margins are being squeezed.
I think if you look at Alliance the a Red
bend An reportant Alliances debt and twenty twenty sives of
the year that we're about to finish, it peaked at
four hundred million when flowers are at their highest. To see,
and it's going to drop down. I think three hundred

(06:03):
and fifty off the top of my head, but you know,
it does put a lot of pressure on overy meet companies.

Speaker 1 (06:08):
The scheme booklet went to farmers yesterday. They've got a
month to decide. They vote on October the twentieth to
pass at least half of Alliances four thy five hundred
shareholders have to vote. I don't see that being an issue,
and then seventy five percent of them have to vote
in favor and as Mark when pointed out, are the
alternatives not looking that great? So good luck to the

(06:31):
Alliance group and good luck to the Farmer's shareholders. Riley
Kennedy from Business Desk, you keep up the good work.

Speaker 2 (06:38):
Thanks, Jeremy. Have a good weekend.