Oceania Dairy's bid to raise $74m hampered

Aspiring dairy company Oceania Dairy Ltd has extended the deadline on its $74.75 million capital raising effort, amid "frustrating" resource consent delays.

It is rasing money to build a dairy powder processing plant near Glenavy in South Canterbury, and hopes signing up supply contracts at the expense of competitors will make it a regional dairy force.

A resource consent hearing seeking approval for the plant was held in December, with opposition coming from four nearby farmers, Fish & Game New Zealand and Forest & Bird.

Yesterday, acting chief executive Paul Parks said a consent decision was expected in mid-February but had been delayed by another round of post-hearing consultation.

The share offer to investors was to close on March 15 but has been extended to April 7 to allow more time for the consent to be resolved, he said. "It is a significant variable that we have no control over, a lot of people [investors] are waiting on that."

The company plans to issue 23 million shares at $3.25 each to financial investors and farmers, with a minimum purchase of 160,000 shares, or $520,000.

Under the terms of the offer, district farmers will have first rights to 13 million shares, with priority going to those who sign up to long- term supply contracts.

The shares will sell for $3.25 each during the offer period or $4.25 a share through a deferred payment arrangement.

Unlike Fonterra, shares will have no link to supply contracts and farmers will be able to supply the plant without investing in Oceania Dairy.

The other 10 million shares will be offered to financial investors.

Mr Parks said he was still optimistic about the project's success, but expectations that farmers would take up 13 million shares were becoming increasingly unrealistic.

"Some farmers' financial position is not as strong as it might have been. They are looking to invest via bank funding which is harder to secure."

The company would look at alternative financial arrangements to help "bridge the gap" for farmers, including using third-party financiers to provide farmers with loans to be repaid from dairy payouts.If the farmers' share portion was under-subscribed, it would be offered to financial investors, he said.

Mr Parks said good progress was being made on signing up supply contracts with dairy farmers.

As well as the $74.75m sought for the dairy plant, it will look to borrow a further $25m to cover construction and start-up costs.

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