NZ Farming Systems Uruguay has raised US$30 million ($46 million) by selling a first tranche of bonds in Uruguay.

The non-convertible bonds have an expected maturity of about 15 years, and pay a fixed interest rate of 5 per cent until September 30, 2010.

After that, they pay a variable interest rate of between 5 per cent and 15 per cent calculated using a formula incorporating gross milk revenue and certain key input costs.

The bonds have an interest-only period until March 30, 2016. Repayments of principal, linked to gross milk revenue, occur after that.

The money raised will be used to develop dairy production on the company's farms in Uruguay, including further irrigation and milking sheds. NZFSU has forecast an annual loss after the worst droughts in 30 years hit the country. The company - in which big rural servicing company PGG Wrightson has an 11 per cent stake - had signalled that it needed more capital by June, and if it did not raise the money it would have to sell some of its land.

Prior to the bond sale it had US$16 million of funding from Uruguayan banks and a short-term facility of US$1.5 million obtained recently.

The company plans to raise further debt for farm development.

It has previously estimated that finishing the conversion of its landholding to dairy production would require up to US$90 million.

NZFSU shares closed up 2c at 47c yesterday.