Rural Equities divests carbon credits, halves Tandou stake to fund dairy conversion
By Suze Metherell
Sept. 29 (BusinessDesk) - Rural Equities, the farming group majority-owned by the Cushing family, sold its carbon credits and halved its stake in Australian agricultural company, Tandou, to fund the dairy conversion of its Eiffelton farm and reduce debt.
The Hastings-based company gained $250,000 from the sale of its carbon units at $4.20 apiece, it said in a statement. Reducing its stake in Tandou to 6.35 percent, from 12.66 percent, at 44 Australian cents per share saw the company gain $400,000 on book value, taking proceeds of its divestments to $6.3 million.
Rural Equities acquired the stake in ASX-listed Tandou for an undisclosed sum last year. Tandou's profit fell to A$200,000 in the year ended June 30, from A$6 million a year earlier as it was unable to recognise a fair value gain in its water entitlements in its accounts, it said. Tandou boosted its water entitlements 148 percent to A$78 million in the year.
The farming investor said it intends to keep its remaining stake in the Australian company, viewing it as a long term investment. Rodger Finlay, Rural Equities deputy chairman and Tandou director, was excluded from the company's decision to reduce its holding.
Rural Equities, which owns 25 farms across New Zealand, has begun a $5.1 million conversion of its Ashburton Eiffelton property which will see 233 hectares of its 396 hectare block converted to a 940 cow dairy farm, with the remaining land to be used for winter grazing and supplementary feed. Earlier this month, the company said debt at its balance date sat at 12.1 percent, or $26.6 million, of its $220 million in total assets.
The farm investor doubled annual profit to $24 million in the year ended June 30, as its six dairy farms produced a record 1.67 million kilograms of milk solids and the price of dairy products soared. At the time, the company flagged a falling dairy price may dent profit, but had expected an uplift in beef and sheep meat to offset it somewhat.
Shares of the company, which trade on the unregistered Unlisted market, last traded at $4.52, giving it a market capitalisation of $162 million.