This article is from the Australian Property Journal archive
DESPITE vocal opposition from a key shareholder and a fresh attack on the governance of Rural Funds by Bucephalus Research, RFM Poultry investors have approve the sale of poultry assets to ProTen Investment Management Pty Ltd for $72 million.
Rural Funds Group (RFF) and RF Poultry (RFP) are both managed by responsible entity Rural Funds Management Limited (RFM).
RFM announced late in October that it had entered into agreements for the sale of RFF’s poultry assets, subject to agreement RFP, own lessee and operator of the farms, for early termination of the leases.
RFP unitholders approved the deal at a meeting yesterday. Settlement of the transaction is expected to occur by the end of calendar 2019.
Kaizen Capital, owner of 19.5% of shares of RF Poultry, wrote the RFP’s board voicing opposition to the sale, saying it “significantly undervalues” the portfolio of 17 farms, and the result of an “opaque, inadequate and flawed sale process”, and also said rents should be 49% lower based on typical yields of 7% to 8% for agricultural assets.
Last week, Hong Kong-based Bucephalus Research renewed its attacks on the group, saying in a statement on its website that the financial accounts of RFM reveal that the entity “loses money farming, is highly levered and the group breached its covenants several times in 2019”.
“It looks as if it would collapse without support from RFF’s unitholders.”
Bucephalus Research accused Rural Funds in September of being a Ponzi scheme. The group described the statements as false and misleading.
RFM is pursuing legal action against US-based Bonitas, which released a report in August that declared RFF stock was “worthless”. In response, $355 million was wiped from RFF’s market capitalisation within 30 minutes of morning trade.
Proceeds from the RFP farms sale will be partially used to fund RFM’s acquisition of three cattle properties in Western Australia for $22.6 million. Expected settlement has been brought forward to January 2020.
“RFM is well advanced with further acquisition opportunities, to be funded by proceeds from the sale,” the group said.
RFM reaffirmed its FY20 forecast adjusted funds from operations of 13.4 cents per unit and distributions of 10.85 cpu, reflecting a payout ratio of 81.0%.
