Farming Systems taps Olam for US$50 million loan
By Jason Krupp
Dec. 21 (BusinessDesk) - New Zealand Farming Systems Uruguay Ltd., the South American dairy farm developer, has tapped majority shareholder Olam International for a US$50 million loan.
The funds will be used for capital expenditure and working capital, and to pay Wrightson the remaining performance fee, management fees, and fees related to the buyout of the management contract, the company said in a statement today.
"The loan is a strong sign of Olam’s commitment and will allow Farming Systems to move forward immediately with key farm development such as electricity infrastructure improvement and irrigation pivots on our farms in the centre of Uruguay, and planned autumn application of capital fertilizer,” said chairman John Parker.
The loan comes after Singapore's Olam agreed to support Farming Systems' short-term funding requirements after it bought a 78% stake in the company in September for $120 million, and carries an interest rate, including withholding taxes, of 9% per annum which is repayable by Dec. 31, 2011.
Farming Systems, which was granted a waiver from seeking shareholder approval for the transaction, said the need for the loan was critical enough it could not spare the time to convene a shareholders' meeting.
It investigated alternative funding arrangements but could not source a loan on terms that were more favourable.
The shares last traded at 61 cents, and have risen 27% this year.