Rural property owner PrimeAg attracts rumoured US interest as business for sale signs go up

A US investor is believed to have bought 8% of struggling rural property owner and manager PrimeAg.

The investor paid $1.30 per share for 21.5 million shares late last week, with the Australian Financial Review's Street Talk column noting that this was well below the net asset backing of $1.58 per share.

The identity of the investor will be made known later this week when a substantial shareholder notice is lodged.

PrimeAg managing director Peter Corish announced less than a week ago (September 11) that the entire business is up for sale via private tender.

A successful sale of the business will privatise the business and return proceeds to investors.

Should the sale process not result in a price that meets the board’s valuation, PrimeAg will begin an orderly sale of its properties.

PrimeAg owns and operates Australian agricultural land and water entitlements with its portfolio stretching from the Liverpool Plains of NSW to central Queensland, 1,200 kilometres to the north.

The 2011 winter crop comprised wheat and chickpeas while, the 2012 summer crop was made up of cotton and sorghum.

It also owns irrigation water entitlements in the Upper Darling and the Fitzroy river systems.

The most recent financial report shows a property portfolio valued at $164 million.

“By positioning properties over a 1200km zone, PrimeAg is able to mitigate climatic risks, most importantly those risks associated with rainfall and drought,” says the company on its website.

PrimeAg is due to hold a special meeting of shareholders on October 17 with the aim of reducing its issued shared capital by repaying $40 million to shareholders – equating to 15¢ cents per share – following recent asset sales.

In July PrimeAg sold its Darling Downs mixed dry land and irrigation properties in Queensland comprising  St Ruth, Colonsay and Prentices and the North Star dry land properties in the Goondiwindi region of Northern NSW comprising Burradoo, Wilga Warrina and Ivanhoe to Global Ag Properties Australia Trust (GAPAT) for $36.7 million.

The properties were acquired by PrimeAg for $35.1 million in 2008.

The Darling Downs properties have been leased back to PrimeAg for three years, and the Goondiwindi properties have been leased back for six months.

PrimeAg announced a net profit after tax of $5 million for the 2012 financial year ending June 30 – a fall of 29% on the previous year.

Recent valuations of PrimeAg’s McIntyre Downs, Mullala, Crooble and Dodds properties resulted in the value of the company’s assets increasing by $5.7 million.

PrimeAg is chaired by former Woolworths boss  Roger Corbett.

The full board comprises managing director and CEO Peter Corish, AM,  Samantha Macansh, the CFO and company secretary and non-executive directors Steve A Williams, Stephen R Williams, David Trebeck, Peter Young, AM and Geoff Hewitt.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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