Scales Corporation, owner of New Zealand's largest topfruit supplier Mr Apple, has raised NZ$25.2m (€15.2m) from a rights issue, enabling it to repay the NZ$20m (€12m) it borrowed from majority shareholder Direct Capital to buy into its biggest customer, fresh produce exporter Turners & Growers (T&G).
Crucially, the share sale leaves Scales with additional funds, which potentially could be used to expand further and, it says, merge with T&G's business unit Enza.
Investment vehicle Direct Capital was part of a consortium alongside the New Zealand Superannuation Fund and Accident Compensation Corp that acquired South Canterbury Finance's 79 per cent share in Scales for NZ$44m (€26.5m) this time last year.
The 10.3 per cent stake in T&G enabled Scales effectively to block a full takeover of the company by German conglomerate BayWa, which now owns 73 per cent of what remains a listed company.
However, Scales and Mr Apple's continued financial interest in T&G, combined with this week's rights issue proceeds, leaves the door open to further consolidation.
'The company wants to work with T&G in relation to the Enza business to identify efficiencies to improve returns to growers,' Scales chairman Mark Hutton commented at the time of the T&G investment.
'Any funds raised from the offer in excess of what is needed to repay the loan and to meet expenses and costs will be used to fund future investments as opportunities are identified by the directors.'
A merger of Mr Apple and Enza, which markets a significant volume of the supplier's fruit, therefore remains a possibility.
'If a merger did eventuate, provided T&G remained a listed company, this could allow the company to receive listed T&G shares in exchange for the Mr Apple business, which would be a valuable asset to the company and therefore its shareholders,' Scales suggested.
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