Otago Daily Times

Al­lied Farm­ers to buy into land man­age­ment com­pany for $2.5m

- Business · Agriculture · Investing · Livestock Industry · Industries · New Zealand · Stratford · Richard Perry

STRATFORD: Ru­ral ser­vices group Al­lied Farm­ers has an­nounced it will buy into a land man­age­ment com­pany, and in two years, may take it over com­pletely.

Al­lied has signed a con­di­tional agree­ment to pur­chase half the shares of the New Zealand Ru­ral Land Man­age­ment Lim­ited Part­ner­ship (NZRLM) for $2.5 mil­lion.

NZRLM is a new en­tity cre­ated to man­age the new NZ Ru­ral Land Com­pany Ltd (NZRLC).

NZRLC will ac­quire ru­ral land and lease it to farm­ing op­er­a­tors.

Al­lied Farm­ers chair­man Richard Perry said there was com­pelling long­term value in own­ing ru­ral land, and the move was help­ing stim­u­late a sec­tor strug­gling to get fund­ing from tra­di­tional sources.

‘‘Es­sen­tially we’re see­ing a lot of pres­sure on the ru­ral sec­tor around re­duc­tion of debt — be­ing driven by a num­ber of sources — but in par­tic­u­lar we’re see­ing a tight­en­ing of credit to the ru­ral sec­tor and ma­jor re­struc­tur­ing, and the need for more credit to be in there from al­ter­na­tive sources.’’

The pur­chase would be funded by a share is­sue.

How­ever, it is con­di­tional on NZRLC com­plet­ing an ini­tial pub­lic of­fer ahead of list­ing on the lo­cal stock ex­change in De­cem­ber, and will take place af­ter that has hap­pened.

The of­fer was ex­pected to be for $150 mil­lion, with Al­lied not com­mit­ted to tak­ing up a stake.

Al­lied has the op­tion to ac­quire the re­main­ing

50% of NZRLM af­ter two years.

Mr Perry said on top of the Al­lied Farm­ers share is­sue to cover the NZRLM pur­chase, the group would also is­sue shares to raise money to ex­pand its fi­nanc­ing op­er­a­tions.

‘‘We have a small fi­nanc­ing busi­ness that fi­nances live­stock at the mo­ment and . . . it’s hard to ac­cess work­ing cap­i­tal, so we’ve an­nounced pre­vi­ously our plans to ex­pand our ex­ist­ing busi­ness of ex­tend­ing fi­nance to food pro­duc­ers, and we’re seek­ing cap­i­tal to as­sist us in do­ing that.

‘‘That’s an­other project that we’re hop­ing to have for­malised in the not­too­dis­tant fu­ture.’’

Share­hold­ers would vote on the move at the an­nual meet­ing, the date of which would be an­nounced shortly.

Al­lied Farm­ers and its sub­sidiaries NZ Farm­ers Live­stock Ltd, Farm­ers Meat Ex­port Ltd and NZ Farm­ers Live­stock Fi­nance Ltd are a ru­ral ser­vices group, with its pre­dom­i­nant ac­tiv­i­ties com­pris­ing the sale of live­stock agency ser­vices, the pro­cure­ment and pro­cess­ing of calves, and the pro­vi­sion of live­stock fi­nanc­ing.— RNZ

❛ Es­sen­tially we’re see­ing a lot of pres­sure on the ru­ral sec­tor around

re­duc­tion of debt

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