Olam offer to help NZ Farming Systems

Takeover bidder Olam International has offered to help overcome a cash crunch at its target NZ Farming Systems Uruguay if its offer succeeds.

In a letter provided to the stock exchange this afternoon, the Singaporean commodity giant confirmed its willingness ''to assist NZFSU to secure a stand-by credit facility ... once Olam has a shareholding of more than 50 per cent.''

It is understood a facility of about US$7 million was being discussed.

The letter was also provided by Farming Systems to one of its lending banks in Uruguay to help release funds from the sale of a farm.

Olam said it had been asked to confirm to the bank that it had no objection to the sale of the farm. ''Olam has provided this confirmation,'' it said.

The Farming Systems board has recommended shareholders sell at least some of their holdings into Olam's 70c a share bid, ''in order to ensure that Olam secures the minimum 50.1% required.''

Acceptances so far give Olam a 40.3 per cent stake and the company today said its bid would not be extended beyond the closing date of September 24, leaving only two weeks to gather a further 10 per cent.

An independent report commissioned for the takeover said Farming Systems was worth between 65c and 79c a share, valuing the company at $159-$193m.

Since listing in 2007 Farming Systems has underperformed its forecasts, with much of the blame placed on an ill-fated spend-up on land in Uruguay that left no money for developing dairy operations on the farms.

The company now says it needs to raise a further US$60m to complete its investment programme. Olam has said it will support a rights issue to raise the money if its partial takeover succeeds.