An equity raising estimated at between $35 million and $55 million is expected to be launched during the next 12 months once the takeover of New Zealand Farming Systems Uruguay is concluded.
Singapore-based Olam International has made a 70c-per-share bid - valuing NZFSU at $170 million - to shareholders which expires on Friday.
Olam has gained about 46% acceptances so far and is only short 4.1% from achieving its goal.
Olam, a multibillion-dollar turnover commodity company, has already said it has $60 million set aside for future capitalisation and signalled it would prefer an equity raising in the future, rather than taking on debt.
Craigs Investment Partner Peter McIntyre said Olam would "easily reach" its 50.1% goal but was unlikely to get as far as 75%.
However, he cautioned if Olam went to 75% it could "creep" towards 90% and seek a full takeover, under a scheme of arrangement.
Given some investors had paid $1 to $1.50 for NZFSU shares, they would be considering retaining some shareholding to get some long-term value back, Mr McIntyre said.
With development of 49 dairy unit conversions required, Olam's initial $60 million would require a top-up from shareholders, of as much as $50 million, he said.
NZFSU has been beset by compounding problems in the past two years, leaving it cash-light and needing $88 million of new capital to complete the conversion of 49 dairy units.
The recent issues followed a decision in 2007 to acquire 19,000ha of land, and resulted from difficulties introducing New Zealand farming systems in a foreign country because of a lack of experienced managers, a drought and soft global commodity prices.
As a consequence, NZFSU has booked consecutive annual financial losses of $23 million and $14.8 million.
Olam, made a 55c-per-share bid in July, then Uruguay-based Union Agriculture Group trumped with a surprise 60c bid, before Olam boosted its bid 27% to the present 70c offer to shareholders.
After initially rejecting the bids, NZFSU's board has recommended shareholders sell some of their stake to Olam, in order for it take a controlling 50.1% interest, as opposed to an outright takeover.
Since Union Agriculture's departure, Olam has gained Overseas Investment Office approval for the purchase.
A 68c to 79c valuation range delivered by independent reports equated to a company valuation of between $160 million and $195 million, with the Olam bid of 70c, worth $85.6 million, implying a company value of about $170 million.
The Singapore Straits Times reported in early June Olam was buying US-based Gilroy Foods and Flavours' dehydrated and vegetable products operations for $US350 million ($NZ482.7 million), with expectations combined operations would add $US300 million to $US350 million to annual revenue.
The companies
Olam International
Singapore-listed Olam International booked an after-tax profit of $S359.7 million ($NZ377.5 million) for the year to June, on sales revenue of $S10.5 billion, on volume of 7 million tonnes of agricultural products and food ingredients.
It sources 20 mainly food products for supply or processing, including cocoa, coffee, several varieties of nuts, rice, cotton and wood products for more than 11,000 customers; with a presence in 66 countries.
Olam is in the top 40 companies on the Singapore stock exchange, by market capitalisation, having listed in February 2005.
New Zealand Farming Systems Uruguay
NZFSU has developed 16 dairy farms and 31 milking sheds employing 400 people milking 14,000 cows in farms across Uruguay.
Of about 30,000ha of land owned, 13,000ha is under operation. Olam first bought PGG Wrightson's 11.5% stake in NZFSU for $15.5 million, which took its stake to almost 30%.
It then gained a 7% stake from ACC for more than $12 million a few weeks later.
In mid-August, NZFSU was granted a $28 million-$35 million tax concession under Uruguay's financial laws, which can be used to offset NZFSU's tax liability after it becomes profitable, which is anticipated for the 2011-12 financial year.
Needs about $88 million of new capital to complete the conversion of 49 dairy units.
