NZ Farming Systems gains investment rating with Fitch

Monday 16th March 2009

NZ Farming Systems Uruguay (NZS) has obtained an A- (uy) investment grade credit rating from Fitch Ratings in a key step towards rebuilding its debt-raising plans. The shares jumped 14%.

NZS raised some $US200 million in equity in 2006 and 2007, but struck trouble late last year when its debt-raising intentions fell foul of the international financial market meltdown.

"The credit rating is a key positive step in this process," said NZS chairman Keith Smith. "NZS is now at an advanced stage in obtaining debt funding from financial markets."

Turning all of its Uruguay land into productive dairy farms would require US$80 million to US$90 million. Smith said last month that the company was in talks with banks to part fund the dairy conversion plans and may also sell some land to fund developments. The company has US$16 million of debt funding from Uruguayan banks already.

The A- (uy) rating relates to the funding structure established for NZS, which uses trusts to provide security over part of the company's milk receipts and part of the company's land-holdings.

NZS reported a $US8.9 million loss last month, reflecting falling dairy prices and the impacts of drought in Uruguay on production levels and feed costs.

NZS seeks to bring efficient New Zealand dairy farming techniques to the South American country.
The shares rose 7 cents to 57 cents on the NZX and are down 17% this year.

Businesswire.co.nz

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