1 00:00:00,560 --> 00:00:04,240 Speaker 1: Heather Duplessy out so, a business associated with billionaire Mark Stewart, 2 00:00:04,240 --> 00:00:07,440 Speaker 1: has made a takeover offer for troubled honey exporter Conveta. 3 00:00:07,800 --> 00:00:09,360 Speaker 1: The offer is to buy all of the shares for 4 00:00:09,400 --> 00:00:12,240 Speaker 1: eighty cents each. That's about fifty six point four million 5 00:00:12,280 --> 00:00:14,640 Speaker 1: dollars in total. The Conveter boarder supporting the offic saying 6 00:00:14,680 --> 00:00:16,040 Speaker 1: this is the best way to get the business back 7 00:00:16,079 --> 00:00:19,200 Speaker 1: on track. Oliver Amanda is the CEO of the Shareholders 8 00:00:19,200 --> 00:00:23,120 Speaker 1: Association and with us Hey, Oliver good evening, Heather, sounds 9 00:00:23,160 --> 00:00:24,400 Speaker 1: like a good deal for shareholders. 10 00:00:24,400 --> 00:00:28,200 Speaker 2: Do you agree, Well, it's a deal for shareholders the 11 00:00:29,200 --> 00:00:31,560 Speaker 2: I mean, certainly. All it reflects is just how much 12 00:00:31,600 --> 00:00:35,120 Speaker 2: has changed a Convita over the past ten years. The 13 00:00:35,159 --> 00:00:38,200 Speaker 2: share price the business was ten years ago was probably 14 00:00:38,240 --> 00:00:40,040 Speaker 2: ten to twelve dollars. I think it picked at about 15 00:00:40,080 --> 00:00:45,280 Speaker 2: twelve dollars during twenty sixteen, and that just reflects what's 16 00:00:45,280 --> 00:00:47,680 Speaker 2: happened in the market since then. And you've seen this 17 00:00:47,680 --> 00:00:51,319 Speaker 2: this glut of Manuka honey honey flood the market that's 18 00:00:51,320 --> 00:00:55,280 Speaker 2: had an impact on margins. More recently that's effected the 19 00:00:55,280 --> 00:01:02,880 Speaker 2: company that's probably really creating this type of outcome for shareholders, 20 00:01:02,960 --> 00:01:06,480 Speaker 2: because it's probably says more about the company's debt levels 21 00:01:06,520 --> 00:01:08,560 Speaker 2: than it does about shareholders. Wow. 22 00:01:09,280 --> 00:01:12,200 Speaker 1: Okay, So is that the fall from twelve dollars a 23 00:01:12,240 --> 00:01:15,400 Speaker 1: share down to about fifty cents? Is that mainly or 24 00:01:15,440 --> 00:01:19,639 Speaker 1: completely because of the flooding of alternatives into the market. 25 00:01:20,800 --> 00:01:24,080 Speaker 2: Look, that's likely to be the case. Yeah, So you 26 00:01:24,160 --> 00:01:26,399 Speaker 2: saw that there's low barriers to entry into the market. 27 00:01:26,440 --> 00:01:29,160 Speaker 2: You've seen a glutt of monuca honey producers and supplies. 28 00:01:29,200 --> 00:01:34,520 Speaker 2: We saw earlier this year we saw King Honey tipped 29 00:01:34,560 --> 00:01:38,600 Speaker 2: into liquidation, which was owned as a subsidiary by another 30 00:01:38,600 --> 00:01:44,160 Speaker 2: INSITTEXL listed company. So yeah, that impacts obviously margins, but 31 00:01:44,160 --> 00:01:46,640 Speaker 2: it also meant that a lot of the supplies like Conveter, 32 00:01:46,760 --> 00:01:50,000 Speaker 2: are carrying significant amounts of inventory and that stock that 33 00:01:50,000 --> 00:01:52,560 Speaker 2: that's going to be funded by something or someone, And 34 00:01:52,640 --> 00:01:55,440 Speaker 2: that meant that in Conveter's case, debt levels went up 35 00:01:55,480 --> 00:02:00,720 Speaker 2: as well. So you've got higher debt levels and then 36 00:02:00,920 --> 00:02:05,640 Speaker 2: that's compounded by reduced margins and losses. All of a sudden, 37 00:02:05,840 --> 00:02:09,560 Speaker 2: some of those what are called bank covenants started, things 38 00:02:09,560 --> 00:02:11,639 Speaker 2: that banks look at to make sure their debts are safe. 39 00:02:12,040 --> 00:02:14,680 Speaker 2: They start to look pretty shaky. So the company has 40 00:02:14,720 --> 00:02:19,359 Speaker 2: been working really hard recently to try to stabilize the business, 41 00:02:19,520 --> 00:02:25,000 Speaker 2: cut costs, cut inventary levels, and negotiate with its banks 42 00:02:25,000 --> 00:02:27,200 Speaker 2: in terms of saying, hey, we need some relief here 43 00:02:27,240 --> 00:02:30,440 Speaker 2: to get us through this particular cycle. The board, they've 44 00:02:30,480 --> 00:02:33,000 Speaker 2: obviously received this offer. I've obviously felt that that was 45 00:02:33,680 --> 00:02:37,480 Speaker 2: probably represents better and more certain value now for shareholders 46 00:02:37,960 --> 00:02:41,480 Speaker 2: compared to what the execution risk might be in future. 47 00:02:42,320 --> 00:02:42,800 Speaker 2: Is it just me? 48 00:02:43,040 --> 00:02:44,880 Speaker 1: I mean, tell me if I'm just if I'm imagining it, 49 00:02:44,919 --> 00:02:46,519 Speaker 1: But it feels like there have been quite a few 50 00:02:46,560 --> 00:02:47,680 Speaker 1: takeover offers lately. 51 00:02:48,960 --> 00:02:51,720 Speaker 2: You're not imagining it, And I think the one interesting 52 00:02:51,720 --> 00:02:53,760 Speaker 2: thing for me is that whenever there's a takeover, of 53 00:02:53,760 --> 00:02:57,240 Speaker 2: course yet maybe it's good for shareholders, but actually that 54 00:02:57,280 --> 00:02:59,560 Speaker 2: means that someone else is seeing value in the business 55 00:02:59,560 --> 00:03:00,400 Speaker 2: for whatever reason. 56 00:03:00,760 --> 00:03:03,280 Speaker 1: But it's sorry, Caaren. 57 00:03:04,160 --> 00:03:07,800 Speaker 2: Marks to it owns another honey business. There's clearly some 58 00:03:07,840 --> 00:03:11,320 Speaker 2: synergy there that he's seeing in a you know, by 59 00:03:11,360 --> 00:03:14,080 Speaker 2: looking at the operations of these two businesses and putting 60 00:03:14,120 --> 00:03:14,560 Speaker 2: them together. 61 00:03:14,720 --> 00:03:16,639 Speaker 1: Yeah, I mean, how do you feel about that though? 62 00:03:16,639 --> 00:03:18,760 Speaker 1: In terms of a business is being taken off the market. 63 00:03:20,080 --> 00:03:22,480 Speaker 2: Well, we don't love it, and if there was a 64 00:03:22,520 --> 00:03:25,240 Speaker 2: pipeline of businesses coming into the market, we feel a 65 00:03:25,240 --> 00:03:28,480 Speaker 2: bit better about it. But ultimately takeover is the ultimate sanction. 66 00:03:28,720 --> 00:03:30,880 Speaker 2: You know, if a business isn't performing for whatever reason, 67 00:03:31,400 --> 00:03:34,639 Speaker 2: then actually or or the sentiment around it is poor, 68 00:03:34,680 --> 00:03:38,520 Speaker 2: the future outlook is poor, then obviously that does start 69 00:03:38,560 --> 00:03:42,560 Speaker 2: to attract interest. And yeah, there's been some probably it's 70 00:03:42,600 --> 00:03:44,920 Speaker 2: not just this year, over the last two to three years, 71 00:03:44,920 --> 00:03:48,080 Speaker 2: it's probably been heightened activity in our market. You know, 72 00:03:48,080 --> 00:03:50,960 Speaker 2: we've seen likes of Pushpay Go, We've seen our Veda 73 00:03:51,160 --> 00:03:57,440 Speaker 2: group disappear. The currently I think Vital Technologies, a small 74 00:03:57,440 --> 00:04:00,680 Speaker 2: Wellington based company, it's t to takeover offer by Tate 75 00:04:01,360 --> 00:04:05,680 Speaker 2: of christ Church. So yeah, look, there's there's it's ultimately 76 00:04:05,720 --> 00:04:08,840 Speaker 2: the arbiter of shareholder value. So takeovers definitely play a 77 00:04:08,920 --> 00:04:11,880 Speaker 2: role market, a really important role. But what's missing at 78 00:04:11,880 --> 00:04:14,360 Speaker 2: the moment is that sort of front end activity to 79 00:04:14,360 --> 00:04:16,280 Speaker 2: bring companies into market. And we think there's a lot 80 00:04:16,360 --> 00:04:20,160 Speaker 2: more work required to get that balance right between private 81 00:04:20,320 --> 00:04:23,159 Speaker 2: and public and the regulations that apply to each to 82 00:04:23,160 --> 00:04:24,559 Speaker 2: make sure it's the level playing field. 83 00:04:24,640 --> 00:04:26,839 Speaker 1: Oliver, While we've got you, how good is a two 84 00:04:26,920 --> 00:04:27,719 Speaker 1: looking at the moment. 85 00:04:29,560 --> 00:04:32,359 Speaker 2: Well, yeah, AA two is that the pole are opposite 86 00:04:32,400 --> 00:04:36,920 Speaker 2: to what we've just described, certainly so today that they've 87 00:04:36,960 --> 00:04:39,680 Speaker 2: announced that the purchase of the Sity milk plants at 88 00:04:39,680 --> 00:04:45,080 Speaker 2: Pocono Fo hundred nat to two million dollars, and it's 89 00:04:45,160 --> 00:04:49,040 Speaker 2: it's kind of in an easier position that they're in 90 00:04:49,040 --> 00:04:50,720 Speaker 2: a good position to do this given the fact they 91 00:04:50,720 --> 00:04:53,560 Speaker 2: have one point one billion dollars of cash sitting on 92 00:04:53,600 --> 00:04:57,240 Speaker 2: their balance sheet, and that's up from nine hundred and 93 00:04:57,360 --> 00:05:00,080 Speaker 2: seventy odd million last year, I think. So it's so 94 00:05:00,160 --> 00:05:02,279 Speaker 2: this is a business that generates plenty of cash, but 95 00:05:02,320 --> 00:05:05,480 Speaker 2: it has traditionally been capital light, so they haven't invested 96 00:05:05,560 --> 00:05:09,760 Speaker 2: much in plant and equipment to support the sale of 97 00:05:09,800 --> 00:05:12,800 Speaker 2: their product into China. So this does mark a bit 98 00:05:12,800 --> 00:05:14,599 Speaker 2: of a step change for them. But had the investment 99 00:05:14,640 --> 00:05:16,880 Speaker 2: in Matawa of Valley Milk in Southland for some time 100 00:05:17,240 --> 00:05:20,360 Speaker 2: that is loss making. Now this is still loss making 101 00:05:20,400 --> 00:05:23,960 Speaker 2: at least initially, so they're relying on growing the throughput 102 00:05:24,080 --> 00:05:27,400 Speaker 2: through the new plant they've purchased. Through the it is 103 00:05:27,800 --> 00:05:29,880 Speaker 2: a broad off as a broader suite of products and 104 00:05:29,960 --> 00:05:32,760 Speaker 2: output compared to Matawa of Value Milk and they're obviously 105 00:05:32,839 --> 00:05:36,600 Speaker 2: banking on growing that to actually improve the efficiency of 106 00:05:36,640 --> 00:05:38,480 Speaker 2: the plant and the amount of products that they can 107 00:05:38,520 --> 00:05:40,159 Speaker 2: put through it. Good stuff. 108 00:05:40,160 --> 00:05:42,360 Speaker 1: It's good to talk to you, Oliver. Really appreciate your expertise, 109 00:05:42,360 --> 00:05:45,640 Speaker 1: Oliver Amanda New Zealand Shareholders Association CEO. 110 00:05:46,480 --> 00:05:49,680 Speaker 2: For more from Heather Dupless Allen Drive, Listen live to 111 00:05:49,760 --> 00:05:52,799 Speaker 2: news talks. It'd be from four pm weekdays, or follow 112 00:05:52,839 --> 00:05:54,600 Speaker 2: the podcast on iHeartRadio.