US$50m loan for NZ Farming Systems Uruguay

Tuesday 21st December 2010

NZ Farming Systems Uruguay (NZFSU) has arranged a short term shareholder loan of up to $US50 million ($NZ67.5 million) with majority shareholder Olam International.

The loan would provide funding for immediate capital spending needs, working capital, and would re-pay outstanding balances owing to PGG Wrightson for performance and management fees and buyout of a management agreement, NZFSU said today.

NZFSU chairman John Parker said the loan would allow NZFSU to move forward immediately with key farm development such as electricity infrastructure improvement and irrigation pivots on the company's farms in the centre of Uruguay, and planned autumn application of fertiliser.

The loan carried an interest rate, including withholding taxes, of about 9% a year, and was repayable by NZFSU on the earlier of December 31, 2011 or a capital raising sufficient to repay the loan.

NZX granted a waiver yesterday in respect of a requirement to obtain shareholder approval for the loan as a material related party transaction, NZFSU said.

The waiver was granted on the basis that the terms of the loan facility were at arms' length and commercial, and entry into the loan facility was in the best interests of NZFSU and shareholders not associated with Olam.

The need for the funding provided by the loan facility needed to be sufficiently critical that funding was required before NZFSU was able to convene a shareholders' meeting.

Another condition was that NZFSU directors had investigated alternative funding arrangements to the loan facility, and in their opinion there were no alternative funding arrangements that NZFSU could enter into on terms that were more favourable for NZFSU shareholders than the loan facility.

NZPA

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