KEY POINTS:
NZ Farming Systems Uruguay is planning to raise at least $50 million to expand its South American operations and expects to float on the NZX next month.
The company was created by 10.6 per cent shareholder PGG Wrightson and had an initial public offering last December.
NZ Farming
Systems has so far raised $169.6 million - issuing shares at $1 each - and in the past year has acquired 30,980ha of farms and land in Uruguay.
Chairman Keith Smith said: "We see that we can expand from the current level to 50,000ha at around the current sort of prices that we've been buying land there.
"We'd be looking at the land over the next six months or so."
The company was planning to issue shares at $1.50 each to institutions and was considering making the same offer to existing shareholders in the form of a non-renounceable rights issue in the ratio of one share for every two held.
The institutional placement and non-renounceable rights issue were expected to raise a minimum $50 million.
The company might accept over-subscriptions.
The closing date for the capital raising was expected to be about December 14, with an NZX market listing following on December 18.
NZ Farming Systems uses New Zealand dairy farming expertise in Uruguay where it can develop a fully functional farm for between $10,000 and $11,000 a ha, compared with about $30,000 to $40,000 a ha in New Zealand, Smith said.
"We've got the ability to increase our size there in Uruguay so it [$50 million] really just adds to the asset base."
In the year ended June 30 the company had a revenue of US$669,000 ($886,000) and made a net loss of US$289,000.
"There's a phase-in," Smith said. "You buy raw land and then you've got to develop it over a period of time. Some will come on earlier than others. It's three years from the time you buy the farm, basically."
In his address to last month's annual meeting Smith said the company expected to produce more than 1.5 million kg of milk solids during the financial year, rising to 18 million kg from 50,000 cows within five years.
More than 70 existing and potential shareholders and institutions visited the company's farms in Uruguay last week.
PGG Wrightson chairman Craig Norgate said people in the dairy industry understood the potential for Latin American countries, particularly Uruguay, Argentina, South Brazil and Chile to use the New Zealand style of farming.
NZX-listed PGG Wrightson has had a presence in Uruguay related to its seeds business since 1999.
"We've looked at listing and the demand and interest there is in investing and said the best thing we can do is a placement before listing to just broaden the share register.
"I think that this is probably just the first really good example of finding a way to package up New Zealand technology and implement it elsewhere around the world in a way that New Zealanders can have a share in it," Norgate said.
PGG Wrightson had the fund and farm manager contracts from NZ Farming Systems and had committed to holding its 17 million shares for three years from the time of last year's initial offering.
PGG Wrightson shares closed down 3c yesterday at $2.07.