NZ Farming Systems raises US$30m

Wednesday 29th July 2009

NZ Farming Systems Uruguay raised US$30 million of bonds in Uruguay, giving it funds to develop dairy farms in the South American country using intensive New Zealand farming techniques.

The company said it received US$47.7 million of bids for the bonds on offer, which will be issued on July 31 at an average price of 99.3% of face value. The bonds were sold to Uruguayan investors and the prospectus was published in Spanish.

The bonds pay 5% annual interest until September 30 next year, when they move to a variable interest rate of between 5% and 15%, using a formula based on gross milk revenue and certain input costs. The debt pays interest only until March 2016 then repayments of principal are linked to gross milk revenue.

In October, the company postponed plans to raise capital to buy more land for farm development, citing global financial turmoil and a weak stock price. In February, it forecast a full-year loss on weak world prices for milk and feed costs during a drought.

The bond sale “has been a key funding objective for a number of months and we are now very pleased to successfully conclude this first tranche,” chairman Keith Smith said.

Prior to the issue, Farming Systems had US$16 million of long-term funding with Uruguayan banks and US$1.5 million of short-term funding. The company plans to raise further debt for farm development, it said.

The shares rose 6.7% to 48 cents when the NZX opened, and have slumped some 23% in the year to date.

Businesswire.co.nz

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