Two-thirds of the votes cast at the annual meeting approved a 5 million share issue to Elevation Capital and a 10m placement to investors within 12 months.
Elevation Capital conceived the NZ Rural Land Company investment fund, now undergoing a $75m to $150m initial public offering (IPO) before listing on the stock exchange in December.
Allied Farmers has been invited to be half-owner of the NZ Rural Land Management Partnership (NZRLMP), for which it will pay $2.5m with 5m shares at 50c each.
It also has a call option to buy the rest of NZRLM after two years.
Allied will provide property and farming knowledge and administrative services.
The bigger share issue to follow, plus a prior one-for-three renounceable rights issue to existing shareholders, will raise capital for Allied’s rural finance company and investments in innovations and digital technologies.
When complete, the company would have 38.8m shares on issue, more than double the current equity.
Chair Richard Perry told the annual meeting the 130-year-old company was in good health following a battering over the past year, with value-add opportunities ahead in the core business and strategic diversification.
The past year had contained a drought, pandemic, political uncertainty, and disruptions to meat processing, sale yards and global markets.
A strong first half enabled Allied to weather a break-even second half.
Profit of $1.2m was down $800,000 from the $2m of the previous year.
Nonetheless, Allied’s directors approved a 1.2c a share fully imputed dividend, not available to either the placement or rights issues, costing the company $496,000.
The challenges confronting farmers and the company in water and the environment would also bring opportunities for which Allied believed it had expertise in finance, agricultural technologies and livestock.
“The intention is to invest a proportion of the new funds into the growth of our finance subsidiary, Rural Funding SolutioNZ, taking it beyond our NZ Farmers Livestock clients,” Perry said.
He says the one-third no votes at the AGM partly stemmed from a lack of information complaint by some shareholders.
Those against must include sizable shareholders, as the registry contains 220 who have between them 83% of the company’s shares.
Directors had been restricted in what they could say earlier in November because the NZRLP IPO had not been published.
An independent valuation of the NZRLM proposal wasn’t possible because it wasn’t an existing business.
Therefore, the Shareholders’ Association rules about dilution required it to vote against the two resolutions.
Perry said he was writing a follow-up letter to shareholders and the directors had at all times tried to keep all parties fully informed.
The directors were not obliged to put the NZRLM resolution to shareholders, as the $2.5m expenditure wasn’t a material transaction under NZX regulations.
Chief executive Steve Morrison told the meeting the new financial year had started slowly as farmers had been cautious following last summer’s drought.
“We have now seen a later-than-usual grass market and farmers remain cautious because of uncertain projections for finished stock in the covid-19 environment,” Perry said.
