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https://www.nzx.com/announcements/379712
Rights Issue Shortfall Placement
23 September 2021
Rights Issue Shortfall Placement Completion
On 28 June 2021, New Zealand Rural Land Company Limited (NZX: NZL) completed a rights issue which raised $20.3 mln in aggregate. The rights issue resulted in a shortfall of approximately $24.0 mln.
NZL is pleased to advise that it has today allotted 16,805,868 ordinary shares at $1.10 per share to place the shortfall from the rights issue and raise a total of $18.486 mln in new capital. This, together with debt capacity that NZL has with Rabobank, represents sufficient capital for NZL to fund the acquisitions that it currently has under due diligence. Given the shortfall placement was at a sizeable discount to NZL’s audited net asset value as at 30 June 2021, NZL was conscious to not raise any capital in excess of what it actually requires to fund the acquisitions that it has under investigation.
NZL today also allotted 1,163,162 ordinary shares at $1.3968 per share to satisfy the performance fee payable to NZL’s manager, New Zealand Rural Land Management Limited Partnership, for the period ending 30 June 2021.
A capital change notice accompanies this announcement.
So the Rights Issue didn't go exactly to plan ?
but some punters on the outside stood up to the plate to buy the shortfall shares instead to save the day ?
Suppose the Merchant Banker on the Board had his work cut out trying to find a new home for the all unwanted
shares in the Rights Issue ?
Just short of 46% of existing holders (by value on what on was sought) taking up their rights doesn't exactly
look like an overly happy or positive vote by existing holders on the June 2021 Cap Raise - does it ?
But wait there's more:
Given the shortfall placement was at a sizeable discount to NZL’s audited net asset value as at 30 June 2021
So there was a sizeable discount to Net Asset value to quit the unwanted large bundle of slightly more than 54% of the Rights Issue shares by value ?
That should make existing holders very happy .. Was the Farm portfolio too aggressively revalued upwards at 30 June 2021 for this to happen ?
Is that also why only slightly less than 46% of Rights Issue shares (by value) were actually taken up by stakeholders ?
Just as well NZL was fortunate enough to be able to rescue the Rights Issue, or it could have been an embarrassing
LARGE FAIL which probably could have had equally large repercussions on transactions the issue was to fund and
downstream the Muddy Boots Management Co through to ALF & it's stakeholders as well
Looking back this was a 2 for 3 Rights issue at $1.10 a shot
NTA at 31 Dec 2020 was $1.208
NZL is undertaking a 2:3 rights issue @ $1.10 to raise $44.33M
from this release:
http://nzx-prod-s7fsd7f98s.s3-websit...634/347973.pdf
So just 22 days before balance date NZL Shareholders were fed the December Net Asset Value of $1.208
with no indication that Net Asset value at 30 June would be 19 cps more ?
That's nice - wonder how many more would have taken up their rights if disclosure that further revaluation gain
upwards was likely for period / year ended 30 June 2021 ; rather than giving away that gain to others along with
NZL stumping up the fee for finding a new home for their unwanted Rights Shares ?
and a bit on the post Rights Issue haggling to clear the deck is here:
https://www.nzx.com/announcements/374643
Allotment of Rights Issue
New Zealand Rural Land Company Limited (NZL.NZX) is pleased to announce that it has today allotted approximately 18.47mln ordinary shares under its rights issue, raising $20.3mln in aggregate. NZL thanks shareholders for this support.
Under its capital management policy, NZL’s primary mechanism for raising capital is through pro rata rights issues. This ensures that existing shareholders receive a first and proportionate right to participate in a capital raise. Accordingly, NZL expects that its rights issues will not be fully subscribed but will give NZL shortfall to place, on no more favourable terms, with institutions and wholesale investors to enable it to then broaden its investor base.
Clyde and Rena Holland, a substantial shareholder of NZL, have agreed to maintain a 9.90% stake in NZL and intend to participate in shortfall placements accordingly. Excluding this allocation, a shortfall of approximately $21.6mln remains which NZL will look to place within the next three months. NZL has received expressions of interest for approximately $2.5mln of that shortfall and welcomes further interest from institutional and wholesale investors.
NZL has agreed to pay third party financial intermediaries a placement fee of up to 1.75% on shortfall allocations.
so aside from the sizeable discount, NZL also stumped up a fee to clear the deck of unwanted Rights Issue shares as well ?
Now despite all this - just FOUR WEEKS ago on 30 August 2021 - NZL issued this commentary
Accounts etc for year ended 30 June 2021:
http://nzx-prod-s7fsd7f98s.s3-websit...211/353578.pdf
Buried on the first page is this -
Financial Performance/Summary for Period Ending 30 June 2021
Net Asset Value (NAV) Per Share $ 1.3968
and Shortfall shares were still issued at a "sizeable discount" to 30 June 2021 Net Asset Value ?
Is there a problem with what the farms are actually worth ? or was there an unwanted rights shares fire sale ?
or was the whole scheme in grave danger of turning badly to kr@p on poor 2:3 Rights Take up ?
Did NZL treat it's Shareholders fairly in communicating only the 31 Dec 2020 Net Asset Value ($1.208) ;
omitting any mention that Net Asset Value just 22 days past the release on 8 June 2021
to End of the Year could be materially higher or different - as it was (at $1.3968 per share) ?
Was there a material omission in NZL's disclosures and releases to it's Shareholders ?
The difference between the two values is almost a 15.63% increase on 31 December 2020 Net Asset Value ..
What sort of message does this send out to Shareholders at large of the Muddy Boots Empire ?
Should ALF's Shareholders also be concerned by this ?
Obviously they are expecting something to be tipped out of ALF's overflowing pot next January in the once a year
divvy up of the excess spoils
Am I missing something here ?
Last edited by nztx; 24-09-2021 at 12:34 AM.
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Annual Report Sheet issued today, disclosing extent of Farm Property mark ups added
Note: Unrealised Revaluations should not be confused with REAL SURPLUSES / PROFIT or even CASH SURPLUSES
until the farming dirt is on-Sold onto a new buyer, if and when that happens
http://nzx-prod-s7fsd7f98s.s3-websit...167/356041.pdf
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Top 20 shareholders as at 31st August 2021
New Zealand Permanent Trustees Limited 15,995,000
Premier Nominees Limited 5,884,902
Forsyth Barr Custodians Limited 4,900,000
Citibank Nominees (Nz) Ltd 4,152,391
FNZ Custodians Limited 4,079,431
Janice Cather Walker, Sinya Jane Walker and Duncan Varnhan Fea
as trustees of the Bill & Jan Walker Family Trust 4,000,000
MFL Mutual Fund Limited 3,667,173
New Zealand Depository Nominee 2,868,474
Accident Compensation Corporation 2,568,796
Investment Custodial Services Limited 2,357,372
HSBC Nominees (New Zealand) Limited 1,413,701
Premier Nominees Ltd Armstrong Jones Property Securities Fund 1,246,681
Tea Custodians Limited 1,116,708
JPMORGAN Chase Bank 1,022,651
Custodial Services Limited 972,607
Allied Farmers Limited 900,000
Kim Christopher Wilkinson & Marie Eleanor Wilkinson 800,000
Public Trust Rif Nominees Limited 773,442
Kiwigold.Co.Nz Limited 666,666
FNZ Custodians Limited 583,536
Last edited by percy; 30-09-2021 at 06:32 PM.
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Thanks for that Percy. I'm in MFL and never seen/noticed NZL show as a holding in their newsletters. Maybe a minor holding for them in their overall portfolio.
Will have to have a better look sometime.
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I don't think you are missing anything nztx. I do wonder about rural land in the South Island going up by 13.7% in what is effectively less than 1 year. But that's what happens when you buy using method A (i.e. a distressed seller) and value using method B (discounted cashflow forecast). This was always the play and the Management Co clips 10% along the way. It works until it doesn't.
By the way, the issuance of new shares to the Management Co will dilute down the NAV which I don't believe is reflected in the quoted value (please correct me if I am wrong). Also the loan of $5m at 10% compounding with put and call options sounds like a high risk play for someone.
Lastly, with a SP of $1.11 and sellers outweighing buyers by 6:1, I think there is a degree of scepticism around the true value. Not paying a dividend doesn't help either, but this business model won't release a lot of cash for dividends per my earlier analyses.
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Originally Posted by percy
The transaction will be financed using a combination of cash on hand and an extended debt facility with Rabobank. In May 2021, NZL’s shareholders approved NZL establishing a $65M revolving credit facility with Rabobank and Rabobank has agreed to extend this facility to $88.5M.
Settlement of this transaction will see NZL temporarily exceed its ‘steady state’ internal debt policy of 30% of total assets. However, NZL will comply with its loan to value ratio (LVR) covenant with Rabobank of 40%. The Directors are comfortable with this position in the near-term given the immediacy of cash flows from this acquisition, NZL’s resulting diversification of tenants and the quality, large scale assets that this transaction provides to NZL.
What will be left over after paying interest (likely increasing rates too) & management fees ?
Nothing like leveraging a deck of stacked cards a bit for future invisible funny money revaluation gains
(Sorry - NON CASH PROFIT/GAINS) on the distant future horizon - is there ?
Here is the Cake as it would have looked, However the kitty is empty now because what was in the pot got spent
After all, another large CAP RAISE fast on the heels of the last Very Successful Cap Raise
may or may not have gone down as well as the last one
Last edited by nztx; 22-10-2021 at 03:31 PM.
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Yes another capital raise will allow them to buy more farm land,which will enable ALF to clip the ticket again.
Bring it on...lol
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Last edited by nztx; 22-10-2021 at 03:54 PM.
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