NZ Farming Systems postpones capital raising

Tuesday 14th October 2008

NZ Farming Systems Uruguay, the company developing dairy farms in South America using New Zealand's intensive farming techniques, has postponed plans to raise capital to buy more properties.

"Current market conditions, including turmoil in world financial markets and the NZFSU share price, do not support an expansionary capital raising," chairman Keith Smith said in a statement.

Shares of NZ Farming Systems have fallen 28% in the past month, lagging behind the NZX 50 Index's 18% drop. The company abandoned plans to announce fundraising as soon as this week, even though the economics of buying more land in Uruguay and possibly Brazil "remain compelling," Smith said.

The decision to put off raising funds is the second setback for entities related to PGG Wrightson, which was forced to delay settlement of its NZ$220 million purchase of a half-stake in Silver Fern Farms because some of its banks couldn't provide funding they had pledged. Wrightson has a management contract for NZ Farming Systems and holds about 11% of the stock.

Smith said the additional capital isn't required to complete conversion to dairying of the 36,300 hectares of land the company current owns in Uruguay. Land and livestock were valued at US$206 million at June 30 and the company has no net debt.

Shareholders will get an update at their annual meeting on October 16, Smith said.

Shares of NZ Farming Systems were unchanged at NZ$1.09. Wrightson gained 6.1% to NZ$1.75, paring its decline in the past month to 34%.

By Jonathan Underhill

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