Van Leeuwen dairy farms sold to New Zealand Rural Land Company

Van Leeuwen Group was at the centre of the Mycoplasma bovis outbreak in 2017. Photo / NZH

New Zealand Rural Land Company (NZL) has confirmed the acquisition of 15 dairy farms for a combined purchase price of $122.7 million.

This announcement includes the acquisition of the 14 Van Leeuwen Group dairy assets, spanning 6,350 hectares in South Canterbury and North Otago, for $112.5m, as well as 456 hectares in Southland for $10.2m.

NZL used a combination of capital raised during its initial public offering and its loan facilities to acquire the assets.

The company raised $75 million when it listed on the share market in December last year.

To make up the difference, NZL drew $54.2 million of the available $65 million from its new revolving credit facility with Rabobank.

The current weighted average interest cost of these borrowings is approximately 3.06 per cent per annum.

The company's bank covenant debt level currently sits at 40 per cent, but the board has outlined its intention to reduce that to 30 per cent - which it describes as a "steady state debt level".

The assets it acquired are all leased for terms of at least 10 years to four experienced tenants, the company said in its statement.

Under the leases, NZL says it has secured an annual revenue stream of $6.1 million.

NZL says it expects to begin paying dividends in FY22, with an interim dividend likely to be declared in February 2022.

NZL shares were last trading at $1.13, down from its NZX debut of $1.31.

The Van Leeuwen Dairy Group was the first to report the cattle disease Mycoplasma bovis when it broke out in 2017.

The business, which is owned by South Canterbury farmers Aad and Wilma van Leeuwen, was put up for sale in 2020 before going into receivership in April last year.