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Farming Systems scores US$25 million tax break

Friday 13th August 2010

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New Zealand Farming Systems Uruguay, the South American dairy operator, announced that it has been granted tax benefits with an estimated current value of US$20 million to US$25 million (NZ$28 -NZ$35 million) under Uruguay tax law. 

The benefits will be available to offset the company's tax liability once it becomes profitable, which is expected to be in the 2011-12 financial year, and form part of a framework implemented by the Uruguayan government aimed at encouraging investment and job growth. 

Farming Systems chairman, John Parker, said approval of the tax concessions recognised the investment made by NZS in developing dairy farms. 

"Our operations have already created about 400 new jobs in rural communities in Uruguay, with 31 milking sheds now in operation, plus dry stock land," said Parker. 

The qualifying investment by the company is expected to be approximately $US70 million, set against the current Uruguayan corporate income tax rate of 25%. 

Farming Systems is currently facing a takeover bid 18.45% Singaporean shareholder Olam International, which has offered to acquire shares in the company it didn't already own at 55 cents apiece.  

Olam, which manages a globally integrated supply chain of food an agricultural products, has entered into an agreement to purchase PGG Wrightson's 11.5% stake in the company, subject to regulatory approval, and is making a full takeover offer on the same terms. 

Farming Systems shares last traded at 56 cents yesterday.

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