Olam set to raise funds as NZFSU shareholders rebel

Wednesday 8th June 2011

Some minority shareholders in NZ Farming Systems Uruguay Ltd (NZFSU) are advising investors to reject a share offer from Singaporean food commodities group Olam International.

The group had secured 90 shareholders representing the minimum 10% support needed to block compulsory acquisition, spokesman Rob Poole said in a statement to the NZX.

The 70c a share offer was too low, with net asset value closer to 85c a share.

Other shareholders rejecting the bid included Kevin Goble, Graeme Edwards and Barry Brook.

"The group, with nearly all of the larger minorities on their list, feel that a higher price can be justified by increasing land prices in Uruguay, the high level of milk prices and the way the NZFSU business is being managed," the statement said.

"The business will always be underpinned by land prices, which have continued to increase in Uruguay."

Olam, which controls almost 82% of Farming Systems, is offering 70c a share to mop up what it doesn't own.

The shares were unchanged at 68c in trading and have gained 9.7% this year.

Last month, an independent adviser Grant Samuel said the full underlying value of the shares was between 60c and 69c, including a premium for control of the company.

The Grant Samuel report said Olam was a major debt provider to NZFSU with US$50 million (NZ$62.9 million), plus accrued interest, forecast to be outstanding at June 30.

It had been forecast that NZFSU needed to raise US$110 million-US$115 million, and if Olam did not get all NZFSU shares, that spending would have to be raised through a rights issue, the report said.

In Singapore, Olam International today announced that it Olam International said it planned to raise S$740 million (NZ$732 million) through an equity fund raising.

Olam said it intended to use the money for capital expenditure, potential acquisitions and general corporate purposes.

Credit Suisse, HSBC, JP Morgan and Standard Chartered Bank are advising Olam on the deal.

NZPA

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