ALF - Allied Farmers Limited

[nztx]

A Change of Address Notice for Eric the Great's Christmas Cards & Other Communications:

All those eager followers & other unfortunate participants in HANGOVER FINANCE
will be interested in Eric's new updated address for Christmas Cards etc:

C/o HER MAJESTY'S LOCK UP & JAIL SERVICE, UK GOVT, LONDON, UK


Don't expect any response even if Return First Class Postage Stamps are included

Eric would be especially appreciative of really large donations, which can be sent direct
to Sir Owen Glenn, to hopefully stave off Insolvency / Bankruptcy motions in pursuit of the
Millions of Pounds awarded to Sir Owen, by the UK Courts & will be gratefully received
from ALF Shareholders who received their share swap at pennies in the pound for their
HANGOVER FINANCE Deposits when the job got dropped into ALF's lap some years ago.


For more on Eric's recent unfortunate UK adventures & tangle with UK Courts, read under :


https://www.stuff.co.nz/business/123...wen-glenn-case

Eric Watson sentenced to jail in UK for contempt of court in Sir Owen Glenn case


Note: Eric Watson is not believed to be involved in today's ALLIED FARMERS (ALF) in any way, which appears to
be reflecting reasonably positive prospects, years after suffering it's end of the HANGOVER FINANCE debaccle.

[Nigel]

Details out today about cap raise and $2.5mil investment for a 50% interest in New Zealand Rural Land Limited Partnership.

The new partnership will be the manager of New Zealand Rural Land Company Limited (NZRLC), a new 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 planning an IPO for later this month of up to $150 million and list on the NZX Main Board in December 2020.


The announcement describes the new venture as "an incredibly exciting and pivotal opportunity for Allied Farmers."

"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 benefits for 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."

As flagged in the earlier announcement, ALF has today outlined a cap raise for existing shareholders. This additional capital (to be raised at 50c) will be
raised through a 1:3 renounceable rights issue to existing shareholders, and (assuming shareholder approval) a further placement to existing holders.

Will be interesting to see if a few more people jump on board to get access to the 50c shares.

The company is already profitable and focused on continued growth.

[blackcap]

Details out today about cap raise and $2.5mil investment for a 50% interest in New Zealand Rural Land Limited Partnership.

The new partnership will be the manager of New Zealand Rural Land Company Limited (NZRLC), a new 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 planning an IPO for later this month of up to $150 million and list on the NZX Main Board in December 2020.


The announcement describes the new venture as "an incredibly exciting and pivotal opportunity for Allied Farmers."

"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 benefits for 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."

As flagged in the earlier announcement, ALF has today outlined a cap raise for existing shareholders. This additional capital (to be raised at 50c) will be
raised through a 1:3 renounceable rights issue to existing shareholders, and (assuming shareholder approval) a further placement to existing holders.

Will be interesting to see if a few more people jump on board to get access to the 50c shares.

The company is already profitable and focused on continued growth.

What I do not understand and maybe someone can help me out here, but ALF is giving a hell of a lot of money for an entity that has just been set up and actually only has the rights to manage a Land Company. So the "vendors" are getting 5 million ALF shares or $2.5m for what?

[nztx]

What I do not understand and maybe someone can help me out here, but ALF is giving a hell of a lot of money for an entity that has just been set up and actually only has the rights to manage a Land Company. So the "vendors" are getting 5 million ALF shares or $2.5m for what?

Agree with postings in previous two posts

Looking at the Announcement -

https://www.nzx.com/announcements/361572



Only half the Management Company is being acquired initially, with call option for remaining 50% after two years

and this:

"The $375,000 convertible loan will be capitalised into shares in NZRLC, at the IPO issue price, or any residual repaid to Allied Farmers if the PDS is not lodged by 31 December 2020 or the offer is withdrawn. The loan does not bear interest."

It would appear that ALF is funding the NZRLC Float expenses

The whole deal could be considerably more generous for both ALF & it's shareholders (ie: a preferential IPO allocation to ALF stakeholders) for the overall risk & resources of ALF apparently being thrown at the NZRLC project

How much is Swasbrook & his interests putting into the IPO - if ALF is effectively bankrolling IPO of the Merchant Banker's "newly created Idea & Scheme" and picking up initially 50% of a Company managing it ? (later possibly 100% in 2 years)

"At completion, an Allied Farmers Director representative will join the Board of NZRLM, and NZRLM co-founder Christopher Swasbrook will join the Allied Farmers Board;"


Most will recollect that Swasbrook is a major holder & Director of the now unlisted BIL (Bethunes Investments Ltd) which sold it's
listed shell (effectively) to enable TLL (Transport Logistics) an NZX Listing in recent few years..

The residual investments in BIL at the time were distributed in-specie via shares in a BIL subsidiary to former BIL shareholders
and remains an unlisted company


Further questions:

How much revenue / surplus will NZRLM likely generate for ALF - has this been disclosed ?

What will further Share Issues (& existing Holder Dilution) by ALF for this likely do for ALF's future EPS & DPS ?


At least twice the $2.5 million plus (depending on price of remaining 50%) & $375 k convertible note headed towards NZRLM & NZRL IPO ; plus Management time & Resources are being thrown at the NZRL project from a relatively small NZX Company's resources - to a relatively new venture

[Felix]

A lot more information would be helpful to have comfort increasing from 17.8m to 38.8m shares on issue. I assume the NZRLC prospectus will shed light on what fee arrangement will be in place for NZRML so that will be good to see.

What makes me most nervous is issuing 10m shares partially to invest in ‘early-stage initiatives in the rural sector’s innovation space’. That sounds like venture capital funding which is a hit and miss activity.

I get the impression the directors want to build a bigger company than their current $12m market cap. Question is whether this is the right approach or is it grasping at straws, like buying Hanover Finance.

[nztx]

http://www.sharechat.co.nz/article/9...ouncement.html

ALLIED FARMERS LIMITED (NZX: ALF) 2020 ANNUAL MEETING CHAIR SPEECH AND DIVIDEND ANNOUNCEMENT


Tuesday 24th November 2020

"My name is Richard Perry and I’m the Chair of Allied Farmers. I welcome you all to our Annual General Meeting today on the behalf of the Board and the Management team. The financial statements and the reports of the directors and auditors for the year ending 30 June 2020 are set out in the company’s 2020 Annual Report. The year’s highlights included:



• Continuing to service our clients during the Covid-19 lockdown to deploy NZ’s first ever hybrid auction system that allowed sale yards to re-open safely in a limited capacity and famers to participate in live auctions online and remotely.



• Improving our approaches to health and safety, risk management and staff wellbeing through a number of initiatives including the extension of some staff benefits such as health insurance for staff.



• The further strengthening of our Board with the appointment of Ross Verry to chair our Finance business and lead the development of that opportunity.



• Appointment of KPMG as the new auditors including the refinement and improvement of our financial statements to “cut the clutter” and improve transparency and communication of our financial performance and position to stakeholders.



• The clarity obtained in challenging and resolving an issue with IRD in respect of using the accumulated tax losses of the company.



• Evaluating several strategic opportunities to deliver new solutions to our customers either via partnering or investment with the most visible being the NZRLM opportunity.



We seek shareholder approval to issue up to $5 million in shares at 50 cents per share by way of placement. This level of capital, coupled with new capital from the rights issue, will give us the funds we require to accelerate our diversification strategy.



I’m delighted to announce a dividend to holders of our existing shares of 1.2 cents per share (fully imputed). This dividend will not be available to any participants in the placements (including the vendors of the Management Company) or participants in our rights issue. To achieve this in the current financial year is a pleasing accomplishment, but you will note that it is lower this year to reflect the lower profit. As has been the case for the last few years, the dividend will be paid in January 2021."

[Beagle]

I was pleased to hear from Vaygor1 the other day, albeit quite briefly. It sounds like he was not keen on this deal. I thought he was going to post his thoughts on here about it but he did mutter something about this place being a whirlpool that drags you in and sucks you under...or words to that effect.

I know he was always keen on these and did have a very large holding but I have always agreed to disagree and think the pedigree of this mutt has always been in question.

[golden city]

I personally think the acquisition is a good one if the listing is successful. The manger company could have revenue of 2 to 3m. Plus it could grow much bigger. Allied could expand to real estate agency beside farm land management I guess

[nztx]

I personally think the acquisition is a good one if the listing is successful. The manger company could have revenue of 2 to 3m. Plus it could grow much bigger. Allied could expand to real estate agency beside farm land management I guess

Okay sure - but ALF themselves have come out with Lower Veal = Lower Profit

That in turn meaning a 40% chop in 2020 already small dividend & that's before
the Cap Raise and throwing around the further Share placements etc

What was the Lead time between 2020 & projected large dallop of NZRL Management
fees again ? What will ALF do in meantime for trading profits & to pay an even smaller
Div on the then enlarged issued Share Capital ?

ALF are primarily an Ag / Livestock Service company.

That is despite the past distraction of being sitting ducks for remnants of the Hangover
Finance outfit landing in their lap to tidy up, some years ago..

ALF have also made mention of drought & the sector is sailing at whims of the seasons
for it's results, quite clearly

If margins & costs are important on farms then how will adding another layer of costs
to operations on captive NZRL Rural sticks likely fare ? - is it even economically viable ?

Will Veal off those blocks, for example be 10-15% more yielding with the NZRL Stamp attached ?

The large scheme of things is a Merchant Banker dreamed up scheme with a hefty price tag
for ALF & it's stakeholders - a new operation at that - in return for giving away a slice of the action.
what will this add to the sector ? Will it even fly at all ?

$5 - $10 million is basically a fair chunk of other's money to throw at a dreamed up start up
Could it not have been more yielding in being added to upsizing their existing businesses
or adding further existing similar businesses to the fold - as was case with their buying into Redshaws ?

How would a new Rural Real Estate Outfit fare in the existing populated Rural RE market ?
What could they offer which was better than those other participants in the game ?
Perhaps there is a bolt-on existing RE Business for Ag service which may be a better add-on
out there as potential acquisition rather than throwing $5 million plus & slice of the action at another
grandiose scheme dreamed up in an Auckland Merchant Banker's office ?

[Lola]

I personally think the acquisition is a good one if the listing is successful. The manger company could have revenue of 2 to 3m. Plus it could grow much bigger. Allied could expand to real estate agency beside farm land management I guess

I also agree with this whole strategy and the given reasons leading to it. Critics forget or are just happy to be ignorant of the fact that the Hanover deals saved Allied from extinction and gave it breathing space to fight another day. This day has come with this visionary proposal.