Comvita & the Legacy of Debt

Overloading of bank debt and a collapsed share price opened the door for Florenz Ltd to plot a takeover of Comvita Ltd for NZc80 per share or NZD56.4m. Both Comvita and Grant Samuel, the adviser it appointed, have warned that shareholder rejection of the offer could result in receivership of the mānuka honey industry’s flagship company. Bruce Roscoe weighs Comvita’s legacy of debt and critiques the adviser’s report to shareholders.

By Bruce Roscoe

From the outset, the Comvita saga has revolved around how it could repay its crippling bank debt. The apocalyptic question has now become, if shareholders do not approve the takeover at the meeting in Auckland scheduled for 14 November, what becomes of the company? The answer is that its banks may tip it into receivership or that it will voluntarily wind itself down and repay the banks as asset sale proceeds come to hand. Comvita, and Grant Samuel alike, admit as much in documents uploaded to NZX on 15 October.   

(The documents were bundled into a 143-page PDF file titled “Comvita Scheme Booklet and Notice of Meeting”. The booklet includes the Grant Samuel report of 72 pages. “Scheme Agreement” and “Scheme of Arrangement” are terms applied to friendly takeovers where the target company cooperates with the bidder and introduces the bid to its shareholders and recommends acceptance. Such schemes are administered according to a rigid legal framework through to High Court approval for protection of all involved parties.)

Receivership or Voluntary Administration

Comvita chair Bridget Coates, in her “Dear Shareholder” letter in the booklet, warns: “If Comvita continues to trade at a loss, the likelihood of receivership or voluntary administration increases”. Like a late-night TV shop channel that repeats product-plug loops, this warning is repeated four times in the booklet – twice by Comvita and twice by Grant Samuel.

Although we write that the Florenz offer amounts to NZD56.4m, the outlay will more than double that amount as Florenz, as new Comvita owner, will bear responsibility for repayment of NZD59.0m of Comvita bank debt before April 2026, and repayment of NZD24m of that total falls due before February. Comvita faces “material refinancing risks and … uncertainly around its ability to fund operations beyond early 2026” if the takeover does not proceed, chair Coates has cautioned.

The Erasure of Collateral

Multiple covenant breaches to date aside, Comvita’s debt repayment schedule now appears non-negotiable due to the erasure of collateral. In effect, the marking down of asset values through “impairment” to reflect “market values” has caused most Comvita bank debt to become unsecured.

Comvita said in its June 2025 year annual report that the NZD94m “syndicated facility” (read: loans too large for one bank) with Westpac New Zealand and ANZ Bank New Zealand is secured by assets of Comvita Ltd and five other Comvita units (one in New Zealand, two in Australia, and one in UK).

Trouble is, Comvita at 30 June stated its shareholder equity – which equates to net asset value – at only NZD54.9m, compared with NZD74.0m in bank debt. Banks had already witnessed Comvita’s shareholder equity plunge from NZD238.5m at June 2023 to NZD156.7m at June 2024. That a further NZD101.4m could evaporate between the June 2024 and June 2025 balance sheet dates would have stunned.

Take just the example of “Property, plant and equipment”, which reduced in book value from NZD72.0m to NZD28.7m between balance sheet dates 30 June 2024 and 30 June 2025. Too, it is no secret industry-wide that current assets are “current” only nominally, insofar as mānuka inventory in many cases could not be converted to cash within one year.

Reflecting a virtual partial consummation of the takeover, Florenz had already directly negotiated a “stay of enforcement action”, with Comvita’s banks before the takeover proposal was announced. 

As the accompanying graph “Comvita Trend in Net Debt and Net Debt Equity Ratio” shows, in the past 14 years Comvita has accelerated bank borrowings in two periods — the years building up to the 2020 market peak, and again building up in the years of the market decline.

The Snake in the Pit

The Grant Samuel report, intended to assist Comvita shareholders in their decision whether to sell or hold their shares, may have freed a snake from a pit. It states: “…with the Florenz offer at $0.80 per share providing the most appropriate reference point for the fair value of the business”.

A valuation normally provides a referent point for the amount a buyer is willing to offer. In Comvita’s case, the order appears reversed. Comvita may have originated the admission that the Florenz offer provided a “reference point” for its “fair value” considering that chair Coates used almost identical wording in her release of Comvita results for the June 2025 year to NZX on 29 August.

Grant Samuel valued Comvita in a range of NZc70 – NZc92 per share. The midpoint of NZc81 rises above the Florenz offer by NZc1. This extraordinary precision – when considered in light of the Grant Samuel opinion that the Florenz offer provides “the most appropriate reference point” for Comvita’s value – invites conjecture that Comvita may have marked asset values down to a level that would meet the amount of the takeover offer.

Coincidentally, Comvita’s shareholder equity, mainly as a result of savage asset impairments, sank to NZc78 per share. 78, 80, 81. A cynic could be forgiven for thinking, “This is too perfect”.

The above text is excerpted from page 20 of the Grant Samuel report which advises Comvita shareholders on the Florenz takeover bid. It implies that Grant Samuel may have referenced the NZc80 per share offer in determining “fair value” for Comvita.

Everything Will Be Better Now

Grant Samuel produces an earnings forecast for Comvita for the years to June 2026 and June 2027. In the forecast, rays of sunlight dispel the gloom of losses past. For the current year, sales, gross profits, and net profits are forecast to increase 10.5% to NZD212.6m, 13.1% to NZD110.6m, and from red ink NZD104.8m to black ink NZD6.4m. The good news does not stop. In the same categories in the year following, sales are projected to reach NZD222.7m (up 4.7%); gross profits, NZD117.9m (up 7.9%); and net profits, NZD10.2m (up 59.4%).        

The first difficulty with the forecast is that no companion balance sheet forecast is supplied. The second omission is a description of Comvita’s business which shows the main product segments and their weighting in the sales mix. Comvita has published that information in the form of a chart for seven product categories with weightings expressed as a percentage of total sales. We have converted those percentages to sales values in the table “Comvita Sales Breakdown 2020-2024” that accompanies this report. Four of those categories were honey or derivative products which, in total, accounted for 84.0% of sales (in the June 2024 year). After 50 years, despite fashionably advertising as a “health and wellness” brand, Comvita has remained a honey company.

Comvita’s latest (and perhaps final) annual report discloses only three vague product groups — “Functional foods”, 72%; “Health care”, 24%; and “Ingredients”, 4%, which we show in a pie chart in this report. The word honey is not seen. Nor has Grant Samuel been able, or permitted, to expand that cursory description. It is as though Comvita already is in private hands.  

The “Draft” Report

Apparent misstatements are highlighted in the sidebar below ‘The “Draft” Report’ to impress that the report reads as though a panicked production. It reflects a marathon effort conducted over a porthole of time as limited as may remain for public ownership of Comvita. If the takeover proceeds, it may also become the last such report that is made public.

Legacy

The word “legacy” recurs throughout Comvita reports to shareholders. It is used interchangeably to code the desirable and the undesirable.

“We focused on performance culture and meaningful connections to build an impactful legacy” — June 2023 year annual report. “Turnaround has carried material costs given structural complexity and legacy issues” — investor presentation, August 2025.

Amid such convoluted and polar usage, it seems assured that the enduring legacy Comvita bequeaths will be the legacy of debt.   

Bruce Roscoe is a Japan-resident researcher and former foreign correspondent and securities analyst.

Notes

(1) The “Comvita Scheme Booklet and Notice of Meeting” report is downloadable under “Announcements” under the CVT symbol on NZX. https://www.nzx.com/companies/CVT/announcements

(2)Grant Samuel Associates Ltd is a New Zealand-registered company whose three shareholders are New Zealand domiciled, according to the New Zealand Companies Register. The Grant Samuel report discloses no relationship between this company and the investment advisory units under Grant Samuel Group Limited of Australia.

SIDEBAR – The "Draft" Report – Misstatements and Data Conflicts

Grant Samuel & Associates Ltd has issued two reports that advise Comvita Ltd shareholders whether to sell their shares in response to takeover bids. Both reports, billed as “independent”, were commissioned by Comvita.

The first report, dated November 2011, responded to the takeover bid launched a month earlier by Cerebos New Zealand Ltd. The second report, dated September 2025, addresses the Florenz Ltd takeover bid announced on 18 August.

Below are 10 examples of apparent misstatements or data conflicts that inhabit the second report. It is difficult to escape the impression that the report is a draft. (I did not set out to proofread or fact-check. The examples sprung from the pages and jarred as I read.)    

(1) Three Australasian and four North America companies are listed in a table titled “Comparable Listed Companies” yet in preceding text Grant Samuel states: “There are no other listed honey companies that are directly comparable to Comvita”.

(2) “King Honey / Me Today” is included in a table showing “implied EBITDA multiples” (a cash flow valuation measure) while a note elsewhere in the report records that Me Today Ltd put subsidiary King Honey into receivership in July 2025. 

(3) In a table showing acquisition values in the “Australasian  Honey Sector”, Grant Samuel states that Manuka Health New Zealand Ltd in September 2018 was sold for an “implied enterprise value” of NZD363m. Land Information New Zealand, whose website publishes the detail of decisions made by the Overseas Investment Office, records the value of this acquisition at NZD269m and dates the approval to December 2018.  

(4) Comvita changed from March to June financial years from the year to June 2016. Grant Samuel’s second report, which should therefore use June years, continues to use March years in the table stating cash flow data for “YEAR END 31 MARCH” 2023, 2024, and 2025. The template used in the 2011 report for the table “Comvita - Statement of Cash Flows (NZ$ millions)”, which states cash flow values for 2009, 2010, and 2011, appears to have been overwritten in the second report.

(5) Grant Samuel writes: “In FY25 impairments and write-downs totaling $72.5 million were made” yet in a report table this category is extended to “Impairments, provisions and other asset write downs” for the same amount in the same financial year. (Comvita financial statements for the year to June 2025 record total “impairments and other asset write-downs” of NZD53.9m. 

(6) The report states that “Comvita has been successful in…extracting higher value from its honey raw material by incorporating it as an ingredient in higher value products, such as medical and personal care products”. Conversely, Comvita’s sales in the “Medihoney” category declined 25.5% to around NZD10.2m in the four years to June 2024 and Comvita did not publish sales data in this category for the year to June 2025.

(7) Gross profit on sales in Japan “is forecast to improve driven by reduced duty and foreign exchange”. What does “reduced foreign exchange” mean?

(8) Two graphs and a table “Overview of New Zealand Honey Exports by Category for Year to June 2025” equate total monofloral manuka honey exports with products certified as UMF^TM  (which is the trademark of the UMF Honey Association). The association has recorded its licensees’ share in retail pack monofloral manuka honey exports at 68.0%. Further, the monofloral manuka honey export total (7,546 tonnes) for the June 2025 year includes bulk honey, which does not qualify for UMF^TM certification.

(9) The report contends that “UMF” (Unique Manuka Factor) and “NPA” (non-peroxide activity) are different manuka honey rating systems whereas historically they are identical. The same formula is used for both when reverse calculated from the volume of methylglyoxal present in the honey. UMF licensees use the UMF trademark and non-licensees use NPA.

(10) Comvita’s chief regulator, the Ministry for Primary Industries, is three  times misstated as the “Ministry of Primary Industries”.

At the end of the report, Grant Samuel advises: “Advance drafts of this report were provided to the directors and executive management of Comvita. Certain changes were made…as a result of the circulation of the draft report. There was no alteration to the methodology, evaluation or conclusions as a result of issuing the drafts”.

Comvita chair Bridget Coats, in her “Dear Shareholder” letter that introduces the “Scheme Booklet” (which includes the Grant Samuel report), counsels that shareholders should read the booklet “carefully and in its entirety”.