NZ Farming Systems Uruguay, the South American dairy farmer, may tap shareholders for US$120 million in a rights issue that could lift the controlling stake of Singapore’s Olam International.
Farming Systems has called a special meeting of shareholders for Nov. 4 in Auckland to vote on a pro rata, non-renounceable rights issue at 70 cents apiece, it said in a statement.
That's 7.7% above the current price of 65 cents and is the same as Olam paid for most of its holding.
The funds raised would allow the company to repay a US$85 million loan facility from Olam due on Dec. 31 and to continue expanding its farming operations.
Olam currently holds 85.93% of Farming Systems, after its full takeover bid came up short of the 90% target that would have allowed it to take the business private.
The Singaporean food commodities group would support the rights issue and take up its full entitlement, provided other shareholders agree to the possibility of its stake creeping up in the event other investors don't take up their rights.
If minority shareholders don't agree, Farming Systems wants their approval to lift the Olam debt facility to US$110 million and extend it for a further 12 months while it considers alternative financing options, chairman Vivek Verma said.
(BusinessDesk)
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