NZL to reinstate dividends
New Zealand Rural Land Co (NZL) has announced its intention to reinstate the company’s dividend and amend its dividend policy.
Under a new deal, the New Zealand Rural Land Company (NZL) is paying $114 million for the properties, which will be leased back to three farming groups involving the Van Leeuwens for annual rentals of nearly $6m.
NZL shareholders will meet on May 24 to vote on the deal.
Chairman Rob Campbell says it has entered into conditional agreements with Van Leeuwen Group and associated entities (VLG) and their major lender to acquire dairy assets in South Canterbury and North Otago totalling 6,350 hectares.
"Over the past four months NZL has, through its manager, undertaken extensive due diligence on these assets and the incoming tenants. NZL considers that, based on its due diligence, the acquisition represents an attractive purchase," he says.
Three farms will be leased to Sustainable Grass Dairy Limited, whose directors include Aad Van Leeuwen and Wilma Van Leeuwen Junior and two independent directors, retired ASB chief executive Mark Heer and former chief executive of Crop and Food Research, Paul Tocker.
Five of the farms will be leased to Performance Dairy Limited, whose board includes Heer, Tocker, Aad Van Leeuwen and Dion Van Leeuwen.
The final six farms will be leased to Performance Livestock Limited, governed by a board comprising Heer, Tocker, Aad Van Leeuwen and Rodney Van Leeuwen.
Campbell says, following due diligence, it is satisfied with the depth of New Zealand dairy farming experience that each tenant entity has and with their respective governance arrangements.
The leases are each for an initial term of 11 years, with two 12-year rights of renewal.
NZL will finance the purchase of farms through a mixture of debt and cash: $71 milliion in cash and a new loan from Rabobank.
While the company has set an internal policy of debt being no more than 30% of the value of NZL's total assets, its latest acquisition will take total debt to 42.6% of total assets.
Campbell says should NZL acquire any of the additional assets, this debt level may increase furhther.
The Van Leeuwen Group was placed into receivership by Australian-based funds manager Merricks Capital. It had refinanced VLG under a $140 million deal two years ago.
VLG is considered one of the largest dairy farming operations in the country, comprising 10 dairy platforms and four support blocks with 8,000ha under management, milking approximately 10,000 cows. It also includes one of the world's largest robotic farms.
New Zealand Rural Land Company is a NZX listed company (NZL.NZX) which invests in high quality rural land in New Zealand. The company has an external manager, NZ Rural Land Management, which is 50% owned by NZX listed Allied Farmers (ALF.NZX).
