2 Sep 2010

Farming Systems coy about third-party talks

12:53 pm on 2 September 2010

New Zealand Farming Systems Uruguay says discussions with a mystery third party willing to inject fresh capital into the company are ongoing, and more should be known early next week.

Reports suggest that Singaporean private investor Duxton Asset Management is the mystery party, as Farming Systems tries to head off a takeover bid by its largest shareholder, Olam International.

Farming Systems won't confirm or deny the reports.

The farm developer started discussions with a third party nearly a year ago, as it became clear it needed about $60 million to repay its former farm manager, PGG Wrightson, and complete the development of its farms in Uruguay.

The deal could also involve selling some farms to the third party and then leasing them back, in order to generate more cash.

Olam bid not completely ruled out

Radio New Zealand understands, however, that Farming Systems has not completely ruled out recommending shareholders accept Olam's 70c-a-share bid.

The two firms have been in talks this week in order to thrash out the details of what the overall funding and management of the company would look like.

Sources say a rights issue, which is Olam's preferred capital-raising option, is also on the table.

Whatever the outcome, Farming Systems is expected to update the market on its negotiations and options early next week.