Investor concerns about the performance of New Zealand Farming Systems Uruguay (NZFSU) appear to have been alleviated by the company successfully raising $NZ47 million ($US30 million) in bonds on the Uruguayan market.
The bond offer, held on Tuesday night (NZ time), was oversubscribed with bids for $NZ74 million, the company said in a statement to the New Zealand Stock Exchange, and additional debt raising was planned.
It intends using the money to continue developing dairy farms on 36,000ha it owns in Uruguay, which would be managed using New Zealand farming systems.
Investor confidence had been rocked when low rainfall and falling world milk prices saw it in February report a $NZ19 million six-month loss and forecast an annual loss before interest and tax in the range of $NZ17 million to $NZ31 million.
NZFSU chairman Keith Smith said the success of the offer was heartening given the credit crisis, but he said the company intended raising further debt for farm development.
The non-convertible bonds have a 15-year maturity with a fixed interest rate of 5% until September 30 next year, and thereafter a variable interest rate of between 5% and 15%, calculated by a formula using gross milk revenue and key input costs.
Mr Smith said the intention was to link debt servicing costs - capital repayment and interest rates - to profitability, while allowing investors to benefit from completion of the NZFSU dairy farm model and future dairy profitability.
Shares opened yesterday at 45c and closed 3c higher at 48c.
