Basket case for egg 'cartel'

16 Sep, 2013 08:49 AM
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AN EGG producer being investigated by the competition watchdog over allegations it is part of an industry cartel has fought off a shareholder uprising to remove the managing director.

At an extraordinary general meeting on ­Friday, Farm Pride Foods, one of the largest egg companies in Australia, faced opposition from shareholders who wanted to remove managing director Zelko Lendich after the company reported a series of losses and a diving share price.

At the meeting, in which management denied entry to the media, 23 per cent of shareholders voted that they had lost confidence in the managing director and the directors should appoint a "suitably experienced person" to replace Mr Lendich.

The company's largest shareholder is West Coast Eggs, with a 46 per cent stake. Mr Lendich is a West Coast Eggs director and the seventh biggest shareholder in Farm Pride.

Just over 87 per cent of shareholders were in favour of appointing an additional independent director to be chairman. One, who did not want to be named, said he was disappointed by the outcome but not surprised.

He said shareholders were not allowed to ask questions about the investigation by the Australian Competition and Consumer Commission (ACCC).

"I hoped they'd take this seriously and start to address these issues plaguing the business," said the shareholder, who invested when the shares were around 50c, down from 9c on Friday.

"It's not personal. It's purely ­financial. The difficulty I have with the company is that there is no independent influence of commercial decisions being made."

Mr Lendich said he was "not concerned at all" shareholders tried to remove him. "There's always disgruntled shareholders," he said. "We're pretty happy with the position of the company."

The ACCC investigation will ask egg producers to explain their moulting practices, a once-a-year period when hens do not produce eggs. Afterwards, their eggs are smaller. It is possible to manipulate the timing of the moult through hens' food and drive up prices because there are fewer eggs available.

Afterwards producers can flood the market with smaller eggs and undercut competitors.

AFR

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