announce@nzx.com

NZ Rural Land Management Limited Partnership

Allied Farmers is delighted to announce that it has conditionally secured the opportunity to acquire 50% ownership in a yet to be established entity, New Zealand Rural Land Management Limited Partnership (NZRLM) for $2.5 million.

NZRLM will hold the external management contract to provide management services to the New Zealand Rural Land Company Limited (NZRLC). NZRLC is a newly formed entity that will acquire rural land under a landlord model whereby the underlying rural land will be leased to high quality farming operators. NZRLC is intending to launch an Initial Public Offering (IPO) in November 2020 of up to $150 million and list on the NZX Main Board in December 2020.

Allied Farmers Chair, Richard Perry, said “This is an incredibly exciting and pivotal opportunity for us. Our strategy is to “be the major solution provider to agricultural producers, growing value for those producers and our investors”. Our NZ Farmers Livestock subsidiary is the foundation upon which we have built and delivered that strategy, and this investment enables diversification in a manner that is complementary to our core values and activities.

From our deep understanding of the rural sector built over more than 100 years, we know there is compelling long-term value in owning rural land, and we can see the benefitsfor farm operators wishing to expand their operational platforms in a capital efficient manner. NZRLC will be a capital providing partner for New Zealand’s highly skilled and productive food producers”.

The NZRLM purchase will be funded by Allied Farmers issuing up to 5,000,000 new ordinary shares at $0.50cps in satisfaction of the purchase price. The number of shares to be issued depends on whether shareholder approval is obtained for the placement, and in any event will not be more than 20% of ALF’s shares on issue. If Allied Farmers cannot issue shares, a proportion of the purchase price may be paid in cash. Completion of the NZRLM purchase is conditional on, and will take place after, the completion of the NZRLC IPO.

Other key terms:

• $75,000 has already been paid;
• $85,000 to be paid on signing of the NZRLM Sale and Purchase Agreement;
• $70,000 to be paid on an Offer Management Agreement for the NZRLC IPO being signed; and
• $145,000 to be paid on registration of the NZRLC Product Disclosure Statement.

Allied Farmers Capital Raise

In addition to the up to $2.5 million of new equity from the proposed issue of shares in satisfaction of the NZRLM purchase price, Allied Farmers proposes to raise, at the same price of $0.50 cps, additional capital by way of a rights issue to existing shareholders and a placement to new investors. Further details on the exact terms and timing of the capital raise will be released once these are finalised.

Richard Perry said “the proposed capital raise will provide the fuel we require to execute on our strategy to invest in the growth of our rural-focused finance business, innovation initiatives, and investment in digital technologies. A proportion of the capital raised in our 2019 Share Purchase Plan (SPP) has supported the enhancement of Allied Farmers subsidiary NZ Farmers Livestock’s Live Auction/Digital strategy and the launch of Allied Farmers’ rural financing subsidiary, Rural Funding SolutioNZ Ltd.

As highlighted in our recent FY20 financial results commentary, our intention is to continue to evaluate and potentially invest in profitable and innovative technologies either by strategic partnership or through direct investment within a disciplined and ethical investment framework”.