Farming Systems pays out dissident bond holder

Photo / supplied

NZ Farming Systems Uruguay, the South American dairy farm developer controlled by Singapore's Olam International, has paid out US$4.3 million to a bondholder who rejected its rejigged strategy.

The investor, who held some 14 per cent of bonds on issue, turned down a plan to raise US$110 million over the coming year to repay debt and streamline the operation in a bid to triple milk production.

Two other investors, holding US$24.6 million, or 82 per cent, of the bonds, agreed to the deal with new covenants attached.

The remaining 3.5 per cent of bondholders will be paid out if they reject the strategy.

Farming Systems said the bondholders agreed to waive a covenant breach in February when the firm didn't provide a copy of the business plan to bondholders by a specified date.

The company wants to reduce its effective dairy area by a fifth and develop more milking sheds, while lifting its herd to 48,000.

That requires an investment of some US$69 million.

At the same time, it's forecasting another two years of losses.

The shares were unchanged at 55 cents in trading yesterday, and have dropped 9.7 per cent this year.