Friday, March 29, 2024

Small Rural Equities buyback offered

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Rural Equities directors are offering a small share buyback to shareholders who want to exit the farming corporate.
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The offer is 750,000 shares in total at $4.70 a share, a 40c premium to the market price on the day the offer was announced.

It opened on September 11 and will close on October 6.

The directors say the offer was part of Rural Equities capital management strategy and to provide liquidity in an Unlisted market where REL shares trade infrequently.

The offer will cost the company $3.5 million compared with the net asset value per share on June 30 of $5.60, which values the company at just under $180m, or the current market capitalisation of $152m.

Sir Selwyn Cushing and his son David, who is executive chair of the company, have beneficial interests amounting to about 70% of REL.

In late August, REL declared an audited total comprehensive income of $3.08m in the farming year to June 30, 2020, compared with a loss of $7.84m from the previous year due to property revaluations.

In the 2020 financial year property revaluation losses and the loss on sale of a property amounted to $5.71m, partly offset by gains in the company’s equity investments of $4.83m.

Operating earnings before interest and tax were $4.98m, a small increase on the previous $4.93m.

“This was a satisfactory operating result and it is pleasing to record a small increase in net asset value in a declining rural property market,” David said.

“The market continues to be subdued due to increasing environmental costs, a lack of foreign investors, tighter bank lending criteria and the disruption caused by covid-19.”

REL will pay a full imputed dividend of three cents a share, the same as the previous year.

In the 2019 annual report, REL listed 17 farms and a total of 7176ha located in Waikato, Hawke’s Bay, Manawatu, Canterbury and Southland engaged in sheep, beef, deer, dairying and arable farming.

REL shares last traded at $4.75, after the dividend and share buyback were announced, and dipped to $3.75 for the two months of April and May, during which time almost no shares were traded.

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