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An ambitious macadamia planting program from Rural Funds Group (ASX: RFF) is set for a financial fertiliser boost after the company announced a $100 million capital raise today, with proceeds also destined for cattle properties and water entitlements.
Over the past two financial years RFF has been busy laying the groundwork for a 5,000-hectare macadamia orchard planting program. To put that scale into perspective, the Australian Macadamia Society reports there are 22,000 hectares of the indigenous crop planted nationwide.
The group already spent $104 million to buy land and water in the Queensland areas of Rockhampton, Bundaberg and Maryborough for the development of these orchards, but now it is rattling the tin to help execute its vision.
The capital will be raised via an entitlement offer at $2.47 per share, representing a 5 per cent discount to yesterday's last trading price.
Looking back historically, the raise at a 4 per cent premium to the RFF price before a damaging short seller report in August 2019 from Bonitas Research, a Texas-based fund founded by Matthew Wiechert who was also behind Glaucus Research which triggered the decline of Blue Sky Alternative Investments.
Since the Supreme Court of NSW ruled in RFF's favour over the Bonitas matter investors have been encouraged by the group's performance which has been on a steady path to recovery and was generally unscathed by the pandemic.
The company notes planting has commenced at Maryborough with 500ha to be planted by November 2021, and an additional 500ha will be planted by June 2022. The equity raising provides funding for these developments.
RFF's responsible entity Rural Funds Management (RFM) is also seeking to acquire additional cattle properties in conjunction with several corporate lessees, with the criteria being that the land must be likely to have similar productivity development potential as its existing cattle properties.
Of the $100 million to be raised, $38.4 million will be spent on 8,338 ML of water entitlements which are leased to a private farming company in the NSW Riverina for five years.
"RFM believes demand for secure water in this region will increase over the long term, as permanent plantings such as almond orchards continue," the group said.
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