The board of Kerry Co-op has said that it will not stop any legitimate request for a special general meeting (SGM).
A group of shareholders are seeking to compel the board to hold an emergency vote on a share redemption scheme. This could have implications for any future joint venture deal with Kerry Group that the co-op might enter into.
In April 2021, talks between Kerry Co-op and Kerry Group on a potential dairy business deal were suspended after over 18 months of discussions.
It is believed the valuation Kerry Co-op placed on the business was among the sticking points.
Shareholders
Kerry Co-op is the largest shareholder in Kerry Group with an 11.4% stake in the company worth around €2 billion.
The group of shareholders from counties Kerry, Cork, Clare and Limerick want a conversion rate for their shares of one to 5.9 plc shares to be added to the co-op’s rulebook.
They have collected around 1,600 signatures from shareholders which they believe is enough to force the co-op board to hold a SGM on the matter.
That document is due to be sent to the board on Friday (November 11) ahead of a scheduled board meeting next Tuesday.
The resolution would require two thirds of shareholders to vote in favour of the proposal at an SGM for the redemption scheme to be written into the co-op rulebook.
Kerry Co-op
Fergus McCarthy, a milk supplier from east Limerick, is among the group, which also includes former Kerry Co-op board member, Paddy Casey.
He explained that they are concerned co-op funds will be substantially reduced to pay for the joint venture while shareholders with no interest in milk processing will see their value in the co-op reduced.
Including the share redemption scheme in the co-op rulebook would have the effect of ringfencing the majority of the co-op’s share capital and require the board to seek shareholder approval for any major investment.
“If it is written in the rulebook then it is a statutory obligation on the board rather than a verbal commitment from a board that will change over time,” McCarthy told Agriland.
In June, the co-op board had planned to put a resolution to shareholders to place the existing share redemption scheme into the co-op rulebook. However, following legal advice the board decided against this.
McCarthy said that the legal advice received by the board has not been made public.
Separate legal advice sought by the group of shareholders from a senior counsel outlined that the board is not prohibited from ring-fencing the funds for the redemption scheme.
McCarthy added that the legal advice would be made available to any shareholder who wants it.
When contacted by Agriland for comment, the board of Kerry Co-op said:
“At this moment, all the board can say is that it will respond in due course, and that any legitimate request for an SGM will not be stopped by the board.”