Enza Limited
Registered Office Address
11-17 Bolton Street
Wellington
Directors
NORRIE, Stephen Robert
BIRNIE, William Norman
Background
Incorporated: 01-APR-2000
Marketer of Apples and Pears, employing over 240 staff,
and have a turnover of around $785,000,000.
Major Shareholders
Guiness Peat Group
Website
www.enza.co.nz
News
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Friday 10th May 2002 - National Business Review, by Nick Stride
"Queen St farmers" have taken effective control of the pipfruit industry. Guinness Peat Group
secured more than 90% of the shares of apple and pear marketer Enza on Tuesday.
The raider and investor will now move to compulsory acquisition of the remaining shares to
wrap up its $72 million takeover bid.
The outcome has realised the worst fears of growers who opposed the deregulation of the
former statutory producer board. They wanted the industry to remain in a co-operative model
in which only growers were allowed to own shares. A corporate owner, they argued, would have
an incentive to minimise payments to growers for produce to maximise its profits and
dividends, reducing them to peasant status.
Enza had revenues of $470 million last year but it has struggled to turn a profit. Its
hedging policy cost it more than $130 million when it was caught out by a plunge in the value
of the dollar, and some investments, notably the Omniport loading facility, proved
ill-judged.
It sold Frucor Beverages, for which Danone last year paid nearly $300 million, for $50
million in 1998.
GPG secured a 19.9% stake in July 2000, paying $1.50 a share. Under Enza's rules at that time
that was the maximum stake allowable to one holder.
Corporate financier FR Partners moved in tandem, buying a matching stake. But the two fell
out and FRP last year sold its stake to GPG, booking a reported $14 million profit.
GPG has not yet announced its plans for the company and the industry.
Director Tony Gibbs, Enza's chairman and himself a mandarin orchardist, is believed to favour
a move toward larger-scale production units.
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03.05.02 - NZSE Company Announcement
On 05/04/2002 GPG Orchards ("GPG") made an offer to aquire all the shares in ENZA Limited
("ENZA") not already held by us. At that time we held 19.99% of the issued shares of ENZA. We
now hold 83.26% of ENZA's shares and all conditions in the offer have been satisfied or
waived, and those who have accepted, have been paid.
GPG has a long term strategic vision for ENZA which includes better returns for growers
through business efficiences. We believe that this offer is fair and reasonable and the
independent Directors of ENZA have made a recommendation to Shareholders to accept the offer.
The offer provides that it is to close at 5:00pm on 06/05/2002, unless extended by us. We
hereby give notice that we are extending the offer period, with the closing date now to be
5:00pm Friday 24/05/2002, or such later closing date(s) as GPG may decide in accordance with
the Takeovers Code.
We appreciate it has been difficult for some growers to consider our offer, given that it has
been made during the busy picking season. By extending the offer period it will give those
growers who have not accepted, and other shareholders, the opportunity to now do so should
they wish.
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18.04.02 - NZSE Company Announcement
Guinness Peat Group plc have provided the following Notice of Offer Becoming Unconditional in
respect of GPG Orchards Limited:
1. On March 2002, GPG Orchards Limited (GPG) gave ENZA Limited (ENZA) notice puursuant to
Rule 41 of the Takeovers Code of a takeover offer in relation to ENZA (Offer).
2. On 5 April 2002, GPG gave notice that pursuant to Rule 45(1)(a)(I) of the Takeovers Code
an offer document has been sent to all persons shown as holders of securities in ENZA as at
28/03/2002.
3. GPG hereby gives notice pursuant to Rule 25(5) of the Takeovers Code that the Offer has
now become unconditional. The minimum acceptance condition referred to in clause 5.2 of the
Offer has been fulfilled, as confirmed by ENZA to GPG after close of business yesterday. The
conditions referred to in clause 5.1 of the Offer are waived by GPG.
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22.03.02 - NBR Personal Investor
Guinness Peat group launched an offer for pip fruit exporter and marketer Enza. GPG, which
already owns 19.9%, said FR Partners had agreed to sell its own 19.9% stake for $1.20 per
share.
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15 February 2002 - NZUM
Shareholders voted to change the companies constitution to allow its shares to be purchased
by non-orchardists, possibly opening the way for a takeover from GPG or FR Partners.
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18 January 2002 - NZUM
Enza managing director Michael Dossor reports that obtaining fruit in the deregulated market
is going better than expected.
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21-11-01 - The Independant, by Jenni McManus
Apple & Pear Board defunct: Growers have never had it so good
Seven weeks after deregulation - and with the $54 million forex dispute that threatened to
decimate the industry now firmly behind them - Enza and a group of newly-independent
exporters are battling to win supply from the country's 1,500 apple growers.
For the past 20 years, Enza and its predecessor, the Apple & Pear Board, had a statutory
monopoly on apple exports - apart from the few who managed to secure private permits when the
regulations relaxed in 1999.
But, with a bumper 16 million crop expected this season and prices at their highest level for
years, the business of apple exporting has, since 1 October, suddenly become contestable.
Growers report that for the first time they are being wooed, consulted and drawn into a
commercial process that for years has been closed to them.
No longer is Enza calling the shots. The politics that came close to killing the industry
have become irrelevant. "We are now a commercial company that will stand and fall on the
basis of our performance," says Enza managing director, Michael Dossor.
While few have yet committed themselves to either Enza or an independent exporter this
season, growers say sometime between now and Christmas they must make a decision.
Meanwhile, they're being wined and dined on an unprecedented level by would-be
exporters-turned-marketeers intent on making deals. In the past couple of weeks Enza's
European-based general managers have visited the major growing regions of Nelson and Hawke's
Bay. Some larger growers are being taken overseas to meet prospective customers, while
offshore supermarket chains are here assessing potential suppliers.
"A lot of deals are being done in bars and restaurants," says Phil Alison, a Hawke's Bay
grower and president of the industry body, PGNZI.
"Every time you go out you see a couple of growers in the corner in a huddle. It's still wide
open. I don't think as much crop has [yet] been signed up as some exporters imagined. But
while there's quite an element of holding back, growers are starting to feel valued."
Among the few to make a decision is a group of Nelson growers which has signed a heads of
agreement with Enza for about 2.3 million cartons. Included in this deal are the Q Group and
Tasman Bays.
Not included, ironically, are former Enza chairman John McCliskie and director John Painter -
both, in their day, fierce defenders of Enza's statutory monopoly. Under the "Yummie" brand,
the pair have reincarnated as independent exporters, competing directly with Enza by selling
fruit direct to foreign supermarkets.
Nobody is yet prepared to forecast how the industry might look this time next year.
Some see the independents dominated by a group of larger exporters, including Fresh New
Zealand, FreshCo, DM Palmer, the Napier-based South African company, Safe, and Empire World
Trade - the service provider to big British supermarket, Tesco, which operates out of Hawke's
Bay.
Other industry-watchers reckon up to 70 exporters of varying sizes might eventually emerge.
It's simply too early to tell, says Paul Heywood, a major Nelson grower. "The real test will
be in two years' time, especially if Northern Hemisphere volumes increase, putting pressure
on the market. If the $NZ goes up to any extent, there'll be a huge cost."
Behind the scenes, meanwhile, Enza and the independents are battling to win the hearts, minds
and commitment from growers.
On the sideline, two former Enza staffers, Mark Fairfield and David Southwood, have set up
International Fruit Services to explore bulk shipping and related logistics. While Enza is
the majority shareholder, the company is keen to brand itself as arm's-length in the hope of
securing some non-Enza business.
The independents, meanwhile, are also exploring the prospect of joint, bulk shipping deals.
Enza, says Michael Dossor, is starting the season in a strong position. After accounting for
a $2.64 per carton charge to settle the forex and Omniport disputes, growers will be looking
at a net $19.40 per carton average payout - the highest return in years. For 2000, the figure
was $16.34. In 1998 and 1999 the average payouts were $14.49 and $10.96 respectively.
Growers, says Dossor, are primarily interested in security of payment and an in-depth
knowledge of international marketing networks. Enza can provide both, he says. "Growers are
looking for security and also know we can handle a big volume."
Significantly, few - if any - exporters, including Enza, will be taking out foreign exchange
cover on behalf of growers. "We can provide advice, but we're not making the call," Dossor
says.
Fresh New Zealand boss John Thompson - a vociferous opponent of the former statutory monopoly
- says almost overnight the industry has gone from being supply-driven to demand-driven.
Fears within Enza that the independent permit-holders, who exported 1.96 million cartons in
1999/2000 and 4.841 million in 2000/01, would wreck the industry have proved unfounded, he
says.
For its part, the PGNZI is warning growers to take care before committing themselves to a
particular exporter. Draft contracts should be run past a lawyer, Alison says, before
anything is signed. PGNZI itself has produced a policy paper detailing the sorts of questions
growers should be asking prospective exporters, whoever they might be.
Security is obviously a key issue, along with the precise point at which title to the fruit
is transferred. Would-be exporters should be questioned about their export experience and
commitment to the industry, particularly research and development. Considerable homework
should be done to assess an exporter's financial viability, says Alison. "A number of
exporters have addressed these questions directly in their submissions to growers."
PGNZI, meanwhile, has taken over the "industry good" generic issues. Formerly done by Enza,
these include market access, R & D, technology transfer, and "integrated fruit production" -
which covers issues like the use of chemicals. It also collects the 18c per carton industry
levy to fund these activities.
Alison's biggest worry now is maintaining quality control. Since Enza's demise as a statutory
monopoly, MaF has assumed a bigger role, especially on phyto-sanitary issues, but the entire
industry will be put at risk if unscrupulous - or desperate - growers try to cut corners on
quality.
"My concern is if growers and exporters produce a lot of shonky product and crash our image,"
he says. "We're at the peak of the world in terms of quality and systems but it wouldn't take
a lot to bowl that. I see signs of it already. Growers will be trying to get every apple in
the carton. There will be a lot of commercial pressure to reduce quality especially if volume
is down. Even Enza will be pulled down if people try to rort the system."
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Friday 17th August 2001 - NBR Personal Investor
Apple exporter Enza hopes a $12 million payment to growers will put an end to a lengthy
dispute over who pays the bill for foreign exchange losses.
Enza's corporate shareholders, Guinness Peat Group and investment bank FR Partners, have
insisted pipfruit growers, not the company, must pay $51 million of forex losses racked up in
previous years.
The payment, part of a deal hammered out between Enza and growers' organisation Pipfruit
Growers New Zealand, will be made next week. It will take the form of a refund of payments
already deducted by Enza from growers' share of apple and pear sales.
The payment will be withheld from one hardline growers' group which has refused to withdraw
its opposition to an industry settlement, claiming Enza must foot the bill for all the forex
losses.
The proposed settlement includes agreement by Enza to pay $30.3 million of losses already
booked but not a further $21.1 million expected next year.
Enza will also pay a $4.2 million loss on the disastrous Omniport loading plant, which has
been closed down.
There are a number of conditions including majority grower acceptance and bank finance for
the $21.1 million loss.
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8 - 15 May, 2001 - NBR Business Today
Enza, the corporatised apple and pear marketing company, is to lose its statutory export
dominance from the next growing season. Agriculture Minister Jim Sutton said the apple and
pear export regulations would be revoked from October 1, giving growers a choice of exporters
who will all compete on an equal footing.
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Wednesday, December 20, 2000 - NBR Briefs
Statutory pipfruit exporter Enza will investigate other ways of protecting its business
against independent exporters after deciding not go ahead with an injunction to block further
export permits. The High Court at Wellington has earlier lifted a temporary injunction to
stop the permits committee from granting any more. Enza said the record number of permits
issued to independents would threaten its supply of export quality fruit and damage grower
returns. But many growers criticised the legal move as interference in independent exporters�
work at a vital time before the harvest.
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Monday, December 18, 2000 - NBR Briefs
Pipfruit exporter Enza, in the midst of a legal dispute over its attempts to control export
permits for rival marketers, has changed its chief executive. David Geor, appointed only last
May, has resigned and has been replaced by Michael Dossor, general manager of the
international division of Turners & Growers, which is 43% owned by GPG, also a major
shareholder in Enza.
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Tuesday, December 12, 2000 - NBR Briefs
Pipfruit exporter Enza posted a $38 million deficit for the year to September 30 after
writing off $49 million in one-off losses. These included a $17.1 million foreign exchange
loss as well as losses on a joint venture in Chile.
The former apple and pear marketing board board, now under the control of corporate
shareholders GPG and FR Partners, will cut its costs by quitting its Wellington head office
at a cost of $2.1 million. The result included six months of trading as a corporate entity.
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Friday 20th July 2001 - NBR Personal Investor, by Chris Hutching
An interim report by the regulatory Apple & Pear Marketing Board fails to resolve the bitter
dispute between apple growers and Enza over foreign exchange losses.
Hawke's Bay apple grower Paul Carpenter said yesterday the report was a setback for Enza,
which is trying to claw back $54 million in forex losses from growers and is debiting grower
accounts up to $4.50 per carton.
"This interim ruling is a very significant development because the board has wide statutory
powers and it could order Enza to modify its position," he said.
But the implications of the report are unclear.
It found some of the foreign exchange options entered into by the former Enza board in the
runup to corporatisation early last year were in breach of regulations, because they
involved non-core operations.
They reveal the former board could have capped foreign exchange losses at $28 million but
took out further options in the belief the exchange rate would become more favourable but
the New Zealand dollar fell further.
"We conclude that, on balance, the package had a very asymmetrical risk profile. That is,
the ratio of potential benefit [mitigation of the $28 million loss to potential loss of $91
million] is simply too great to be regarded as hedging expected returns.
"The package contained sold call options that increased exposure rather than reduced risk
and were therefore not a hedging instrument. They were therefore not necessary to the core
business and, as they represented more than a minimal risk for suppliers, they represent a
breach," the report said.
But it also said the contracts struck for the 2001 season are beyond its purview.
Enza now has an opportunity to make submissions to the board over the next fortnight and
then it will make a final deliberation.
Enza has challenged the report, saying it only confuses the issue. Mr Gibbs' office
yesterday referred all inquiries to his public relations officer.
But Mr Carpenter said his personal position highlighted the absurdity of Enza's heavy-handed
actions in debiting grower accounts to recover the forex losses.
He bought his orchard business in December, 1999 and missed out on the allocation of Enza
shares but his account has been debited like everyone else's.
Mr Carpenter said about 40% of growers were financially supporting Pipfruit Growers New
Zealand's actions to force Enza to arbitration.
Others would have liked to join in the action but the $200 fee was too expensive for some,
who were financially on their knees. He said he knew of some growers whose bank accounts
were frozen by banks.
"How on earth does Enza think it can marginalise so many of its suppliers if it expects to
stay in business?" Mr Carpenter asked.
Legislation may be required to force the issue but the government is unwilling to take the
step except as a last resort.
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Friday 13th July 2001 - NBR Personal Investor
Apple growers went sour on Enza this week as they waited to find out whether they will be
stung for the cost of the marketer's forex losses. Enza chairman Tony Gibbs, chief executive
Michael Dosser and director Brian D'ath met with Agriculture Minister Jim Sutton on Tuesday,
as part of the consultation in the scrap over who is going to cover the losses. Enza wants
to deduct up to $4.50 per carton from growers' earnings to provide for $54 million forex
losses - growers believe Enza's major shareholder Guinness Peat Group and FR Partners should
cover it.
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Friday 6th July 2001 - NBR Personal Investor, by Chris Hutching
Enza's $50 million foreign exchange crisis has caused a hiatus in the $700 million export
industry, with many growers on the financial brink and delaying winter orchard management
until a solution is worked out.
At the same time it is doubtful Enza has the capacity to absorb the losses and its main
shareholders, F R Partners and GPG, would be unwilling to recapitalise the company under
such circumstances.
The imperative to find a solution is growing, ahead of pending deregulation of Enza's export
monopoly in October.
Pipfruit Growers NZ (PGNZ) has commissioned Crengle Shreves & Ratner and Robert Dobson QC to
investigate the legalities of the issue and spokesman Phil Alison said Enza had the right to
claw back just $8 million or 67c a carton - not the $4.50 a carton proposed.
Industry sources warned of the imminent financial collapse of 30% of Enza's suppliers if the
full amount was clawed back and said banks were becoming increasingly nervous.
Mr Alison said, contrary to popular misconception, there was no "grower account" of expenses
for which growers were responsible. Costs, including foreign exchange losses, were Enza's
responsibility and it could only claim back money to the extent that the 2001 supply
contract allows.
Mr Alison said an injunction was inappropriate because the supply contract provided for a
disputes procedure.
PGNZ is continuing to meet and talk with Enza to work out which currency transaction should
lie with growers under the current contracts. PGNZ's foreign exchange adviser is expected to
report back early next week.
Tony Gibbs, the chairman of the recently privatised single- desk apple marketer, has led
with his chin on the issue with his cheeky proposal growers should cover Enza's losses. It
appears Mr Gibbs hopes his secondary proposal to levy growers over five years will be more
palatable.
Imposing the levy on all growers would require government legislation and there are many
classes of growers, including independent exporters, who would be caught unfairlys. It is
unclear whether a levy should capture all growers or just Enza suppliers.
Loading all the costs on growers conveniently ignores their ownership of only 60% of Enza's
shareholding. The balance is held by FR Partners and GPG, who would or should have been well
aware of the kind of liabilities they might face when they bought into the company last
year.
Industry sources continue to argue about whether the previous Enza board is responsible for
the blowout or whether the new board under Mr Gibbs has played a part.
The crisis has given opposition Tasman MP Nick Smith considerable political traction as
Agriculture Minister Jim Sutton exhorts various parties to work out the issues through
arbitration before resorting to legal or legislative solutions. Mr Sutton has sought legal
advice from the Crown Law Office and is expecting that within the next week.
Mr Smith yesterday called on Enza to release a valuation report carried out last August but
in fact the report has been available for some time to growers who are members of Enza's
website.
It reveals a valuation of between $100-120 million but qualifies this with various reasons
such as limited share liquidity for discounting the value about 50%.
FR Partners and GPG paid about $6 million each for the holding.
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Friday 9th February 2001 - NBR Personal Investor
Apple and Pear exporter Enza's growers defeated an attempt by corporate shareholders GPG and
FR Partners to change the company's constitution to allow it to list on the Stock Exchange.
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Friday 15th December 2000 - NBR Personal Investor
Apple exporter Enza posted a $38 million September-year loss. An $11 million operating
surplus was outweighed by one-off losses including a $17 million foreign exchange loss.
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