Big almond farmer and processor Select Harvests has speedily raised $81.7 million from institutional investors after unveiling acquisition plans to grow its orchard area by 20 per cent.
Select will pay about $129m for the Piangil Almond Orchard in the northern Victorian Sunraysia, about 86 kilometres south west of its Carina West processing plant near Mildura.
The Piangil plantation, on the Murray River, is currently jointly owned by managed investment scheme United Almonds, private investor HB Tan's Bright Light Agribusiness and Lake Lucas Almonds.
Select's purchase involves 1177 hectares of mature trees, 389ha immature plantings, 1877 megalitres of high security water entitlements, a further 622Ml of low reliability water, plus some farm equipment.
The deal is expected to close by late December.
It includes full ownership of the coming season's crop, with Select repaying some of the current owners' input costs for 2020-21.
Share offer
Select Harvests will fund its acquisition with a combination of new debt and proceeds from a $120m fully underwritten share entitlement offer to investors.
The institutional offer late last week raised $40.2m from new shares sold at $5.20 each, plus $41.5m from an entitlement available to existing shareholders of one new share for every 6.3 already owned.
A further $38.3m is expected to be raised from retail shareholders when that offer opens at the end of this week.
The 7.7m new shares available from the capital raising are equivalent to about eight per cent of Select's total existing market stock.
Given the institutional offer received strong support from new and existing investors - a 99 per cent take up - an equally solid level of interest is expected from ordinary shareholders according to industry observers.
Top yielding orchard
Managing director Paul Thompson said the new orchard rated as one of Australia's top quartile yielding almond operations, and had demonstrated consistently high yields.
The extra planted area would expand Select's total orchard coverage in Victoria, South Australia and NSW to about 9260ha, with harvest tonnages set to increase to 4600 next year and 5400 by 2026 as more plantings reached maturity.
Increased nut production would also optimise throughput efficiency and reduce per unit processing costs at Select's nearby almond plant.
The new owner will also begin some water supply and harvest machinery upgrades to further improve the Piangil orchard's yield prospects.
Mr Thompson noted the recent bloom at the new orchard was strong, indicating potential for another "above industry average crop in 2021".
"The Piangil Almond Orchard has an attractive maturity profile with a weighted average age of 10.9 years and approximately 25pc immature plantings," he said.
Select's current average plantation weighted average age is almost 13 years.
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Meanwhile, Select Harvests has confirmed it has been navigating a "challenging domestic market" and a 37pc drop in total Australian almond industry exports in 2019-20, due largely to market disruption caused by the coronavirus pandemic.
The company saw much of its domestic activity swing from the food service segment to retail markets this year and subsequently had invested more effort in its Sunsol and Lucky brands to meet changing domestic buying patterns.
At the same time Select has been reviewing its strategic growth options and its supply chain, including its Thomastown production office and warehouse site in Melbourne, where the current lease has expired.
That review into its food division was due to be finished by year's end.
Select Harvests' share price initially dipped to $5.42 after its acquisition announcement late last week, but rebounded early this week to $6.05 as the market noted the institutional investor support for the capital raising.
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