21 Aug 2015

JBS wants controlling stake in Scott Tech

12:11 pm on 21 August 2015

Scott Technology is asking shareholders to consider a capital raising plan which will give one of its key customers a controlling interest in the business.

The Brazilian-owned meat processor JBS Australia wants a 50.1 percent stake in Scott, which makes equipment for mining, meat processing and manufacturing assembly lines.

Under the scheme of arrangement, which requires 75 percent shareholder approval, JBS plans to buy 10 million shares at $1.39 each, and offer to buy investors' holdings at the same price.

If shareholders don't want their stake diluted, they can buy one share for every eight held, also at $1.39 each, while there'll be a further placement to JBS, if need be, to get the company to 50.1 percent.

Chief executive of Scott Technology Chris Hopkins said that was not the offer the company had been envisioning when it first began exploring options to raise money.

"Initially we were looking only at a cornerstone shareholding ... 20 to 30 percent ... but part of their (JBS) requirement was to have a controlling interest. It's not something that's negotiable or that we had an influence on."

Mr Hopkins said the deal will bring in at least $20 million in extra money to invest in the business.

He said shareholders should get the company's view on the offer in late October, with a special meeting to vote on the deal in November.

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