Olam International has signalled its intention to turn to shareholders to provide fresh capital for farm development should it gain a majority stake in New Zealand Farming Systems Uruguay (NZFSU).
That could include a pro-rata rights issue.
Its intention to go to shareholders for funding was contained in a letter to the NZFSU board released on Friday.
In the September 1 letter to the NZFSU board, initially kept confidential but made public at the request of the directors, Olam answered questions on how it would meet NZFSU's capital requirements and its view on selling surplus land.
Previously, NZFSU had said it needed $NZ85 million to complete the conversion of its Uruguayan landholdings to New Zealand-style dairy farms.
Subsequent to receiving the letter, the NZFSU board advised shareholders to accept the 70c a share offer for at least part of their shareholding.
The board had rejected Olam's initial offer of 55c.
In a statement, NZFSU said it believed it was in the interests of shareholders for Olam to have a majority shareholding to provide funding certainty and to allow completion of its farm development.
Sharing in future financial gains was another issue earlier identified by the NZFSU board, and it said that retaining a significant minority shareholding was desirable for this to happen.
Olam said if it gained a majority stake, it would work with the board to meet immediate capital needs.
It would review its long-term business plan and develop a long-term funding strategy.
"Olam's view is that the majority of this long-term funding should come from equity rather than debt and that it should be raised in a fair and equitable manner from NZFSU shareholders in the first instance."
That would most likely be from a pro-rata rights issue.
It supported NZFSU's core strategy of adapting Uruguayan dairy farms and managing them under New Zealand systems.
A review of the business plan would include its current land portfolio, and some could be sold.
Olam has also announced its offer would not be extended, and will close on September 24 as planned.
